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We face a moment of opportunity, but also of great risk. The world is counting on the
UN climate talks in Paris later this year to achieve a global agreement that puts us on a
more sustainable path. As IEA analysis has repeatedly shown that the cost and difficulty
of mitigating greenhouse-gas emissions increases every year, time is of the essence. And it
is clear that the energy sector must play a critical role if efforts to reduce emissions are to
succeed. While we see growing consensus among countries that it is time to act, we must
ensure that the steps taken are adequate and that the commitments made are kept.
In recent years, progress has been made in developing cleaner, more efficient energy
technologies. Indeed, we are seeing signs that economic growth and energy-related
emissions – which have historically moved in the same direction – are starting to
decouple. The energy intensity of the global economy continued to decline in 2014 despite
economic growth of over 3%. But increased effort is still needed if we are to keep open
the possibility of limiting the rise in global mean temperature to 2 °C. The pledges – or
Intended Nationally Determined Contributions (INDCs) – made by individual countries for
the 21st UN Conference of the Parties (COP21) in December 2015 will determine whether
this goal will remain attainable.
This special report, part of the World Energy Outlook series, assesses the effect of recent
low-carbon energy developments and the INDCs proposed thus far. It finds that while global
energy-related emissions slow as a result of the climate pledges, they still increase. To
compensate, governments will need to ramp up efforts, reviewing their pledges regularly,
setting realistic and attainable longer-term goals and tracking their progress. This report
also proposes the adoption of five measures that would achieve a near-term peak in global
energy-related emissions while maintaining momentum for stronger national efforts.
The next few months could be decisive in determining our energy and climate future. Will
countries take on and abide by commitments that will make a meaningful impact? Will
they agree to additional measures to spur further innovation and action? Achieving our
goals is still possible, but the risk of failure is great: the more time passes without a deal,
the more high-carbon energy infrastructure is locked in.
Foreword 3
Acknowledgements
This report was led by the Directorate of Global Energy Economics (GEE) of the International
Energy Agency (IEA). It was designed and directed by Fatih Birol, Chief Economist of the
IEA. The analysis was co-ordinated by Laura Cozzi, Dan Dorner and Timur Gül. Principal
contributors to the report were Brent Wanner, Fabian Kęsicki and Christina Hood
(Climate Change Unit), together with Marco Baroni, Simon Bennett (CCS Technology
Unit), Christian Besson, Stéphanie Bouckaert, Amos Bromhead, Olivier Durand-Lasserve
(IEA/OECD), Tarik El-Laboudy, Tim Gould, Mark Hashimoto (Emergency Policy Division),
Markus Klingbeil, Atsuhito Kurozumi, Ellina Levina (Climate Change Unit), Junling Liu,
Sean McCoy (CCS Technology Unit), Paweł Olejarnik, Nora Selmet, Daniele Sinopoli,
Shigeru Suehiro, Johannes Trüby, Charlotte Vailles, David Wilkinson, Georgios Zazias and
Shuwei Zhang. Sandra Mooney and Teresa Coon provided essential support.
Experts from the OECD also contributed to the report, particularly Jean Chateau. The
report benefited from valuable inputs, comments and feedback from other experts within
the IEA, including Didier Houssin, Keisuke Sadamori, Liwayway Adkins, Philippe Benoit,
Pierpaolo Cazzola, Paolo Frankl, Rebecca Gaghen, Jean-François Gagné, Takashi Hattori,
Juho Lipponen, Duncan Millard, Misako Takahashi, Samuel Thomas, Laszlo Varro and
Martin Young. Thanks also go to the Agency’s Communication and Information Office for
their help in producing the report, and to Bertrand Sadin and Anne Mayne for graphics.
Debra Justus was the copy-editor.
The work could not have been achieved without the support provided by: the European
Commission (Directorate-General for Climate Action); the Foreign and Commonwealth
Office, United Kingdom; Ministry of Economy, Trade and Industry, Japan; ClimateWorks
Foundation; and, Statoil.
A High-Level Advisory Panel provided strategic guidance for this study. Its members are:
The Honourable Tim Groser Minister of Trade, Minister for Climate Change Issues and
Associate Minister of Foreign Affairs, New Zealand
H.E. Dr. Elham M.A. Ibrahim Commissioner for Infrastructure and Energy, African Union
Mr. Fred Krupp President, Environmental Defense Fund, United States
Dr. Adnan Shihab-Eldin Director General of the Kuwait Foundation for the
Advancement of Sciences and former Secretary-General of
OPEC, Kuwait
Dr. Leena Srivastava Acting Director-General, TERI (The Energy and Resources
Institute), India
Professor Laurence Tubiana Special Representative of the French Minister of Foreign
Affairs for the 2015 Paris Climate Conference (COP21) and
French Ambassador for Climate Negotiations
Professor Zou Ji Deputy Director-General, National Centre for Climate
Change Strategy and International Cooperation, China
Acknowledgements 5
A workshop of international experts was organised by the IEA to gather essential input
to this study and was held on 5 March 2015 in Paris. The workshop participants offered
valuable insights, feedback and data for this analysis.
Many experts from outside of the IEA provided input, commented on the underlying
analytical work and/or reviewed the report. Their comments and suggestions were of great
value. They include:
Acknowledgements 7
Simon Upton OECD
Stefaan Vergote Directorate General for Energy, European Commission
Daniele Viappiani Department of Energy and Climate Change, United Kingdom
Peter Wooders International Institute for Sustainable Development
Henning Wuester International Renewable Energy Agency (IRENA)
Rina Bohle Zeller Vestas Wind Systems
The individuals and organisations that contributed to this study are not responsible for any
opinions or judgements it contains. All errors and omissions are solely the responsibility
of the IEA.
Table of Contents 9
5 Building success in Paris and beyond 131
Introduction 132
Energy sector needs from COP21 133
Seeing the peak: a milestone to make climate ambition credible 136
Enhancing ambition: a five-year review cycle 138
Locking in the long-term vision 141
Tracking the energy transition 145
ANNEXES
Annex A. Policies and measures 149
Annex B. Data tables for the Bridge Scenario 153
Annex C. Definitions 187
Annex D. References 193
A major milestone in efforts to combat climate change is fast approaching. The importance
of the 21st Conference of the Parties (COP21) – to be held in Paris in December 2015 – rests
not only in its specific achievements by way of new contributions, but also in the direction
it sets. There are already some encouraging signs with a historic joint announcement by the
United States and China on climate change, and climate pledges for COP21 being submitted
by a diverse range of countries and in development in many others. The overall test of
success for COP21 will be the conviction it conveys that governments are determined to
act to the full extent necessary to achieve the goal they have already set to keep the rise in
global average temperatures below 2 degrees Celsius (°C), relative to pre-industrial levels.
Energy will be at the core of the discussion. Energy production and use account for two-
thirds of the world’s greenhouse-gas (GHG) emissions, meaning that the pledges made at
COP21 must bring deep cuts in these emissions, while yet sustaining the growth of the
world economy, boosting energy security around the world and bringing modern energy
to the billions who lack it today. The agreement reached at COP21 must be comprehensive
geographically, which means it must be equitable, reflecting both national responsibilities
and prevailing circumstances. The importance of the energy component is why this World
Energy Outlook Special Report presents detailed energy and climate analysis for the sector
and recommends four key pillars on which COP21 can build success.
Executive Summary 11
The energy contribution to COP21
Nationally determined pledges are the foundation of COP21. Intended Nationally
Determined Contributions (INDCs) submitted by countries in advance of COP21 may
vary in scope but will contain, implicitly or explicitly, commitments relating to the energy
sector. As of 14 May 2015, countries accounting for 34% of energy-related emissions had
submitted their new pledges. A first assessment of the impact of these INDCs and related
policy statements (such as by China) on future energy trends is presented in this report
in an “INDC Scenario”. This shows, for example, that the United States’ pledge to cut net
greenhouse-gas emissions by 26% to 28% by 2025 (relative to 2005 levels) would deliver
a major reduction in emissions while the economy grows by more than one-third over
current levels. The European Union’s pledge to cut GHG emissions by at least 40% by 2030
(relative to 1990 levels) would see energy-related CO2 emissions decline at nearly twice
the rate achieved since 2000, making it one of the world’s least carbon-intensive energy
economies. Russia’s energy-related emissions decline slightly from 2013 to 2030 and it
meets its 2030 target comfortably, while implementation of Mexico’s pledge would see
its energy-related emissions increase slightly while its economy grows much more rapidly.
China has yet to submit its INDC, but has stated an intention to achieve a peak in its CO2
emissions around 2030 (if not earlier), an important change in direction, given the pace at
which they have grown on average since 2000.
Growth in global energy-related GHG emissions slows, but there is no peak by 2030 in
the INDC Scenario. The link between global economic output and energy-related GHG
emissions weakens significantly, but is not broken: the economy grows by 88% from 2013
to 2030 and energy-related CO2 emissions by 8% (reaching 34.8 gigatonnes). Renewables
become the leading source of electricity by 2030, as average annual investment in non-
hydro renewables is 80% higher than levels seen since 2000, but inefficient coal-fired power
generation capacity declines only slightly. With INDCs submitted so far, and the planned
energy policies in countries that have yet to submit, the world’s estimated remaining
carbon budget consistent with a 50% chance of keeping the rise in temperature below 2 °C
is consumed by around 2040 – eight months later than is projected in the absence of
INDCs. This underlines the need for all countries to submit ambitious INDCs for COP21 and
for these INDCs to be recognised as a basis upon which to build stronger future action,
including from opportunities for collaborative/co-ordinated action or those enabled by a
transfer of resources (such as technology and finance). If stronger action is not forthcoming
after 2030, the path in the INDC Scenario would be consistent with an average temperature
increase of around 2.6 °C by 2100 and 3.5 °C after 2200.
Executive Summary 13
with recent years, the pace of this decoupling is almost 30% faster in the European
Union (due to improved energy efficiency) and in the United States (where renewables
contribute one-third of the achieved emissions savings in 2030). In other regions, the link
between economic growth and emissions growth is weakened significantly, but the relative
importance of different measures varies. India utilises energy more efficiently, helping it
to reach its energy sector targets and moderate emissions growth, while the reduction of
methane releases from oil and gas production and reforming fossil-fuel subsidies (while
providing targeted support for the poorest) are key measures in the Middle East and Africa,
and a portfolio of options helps reduce emissions in Southeast Asia. While universal access
to modern energy is not achieved in the Bridge Scenario, the efforts to reduce energy-
related emissions do go hand-in-hand with delivering access to electricity to 1.7 billion
people and access to clean cookstoves to 1.6 billion people by 2030.
Five-year revision
A five-year cycle for the review of mitigation targets is needed to provide the opportunity
for commitment to stronger climate ambition over time. The energy context in which
climate goals are being set is changing rapidly as the cost and performance of many low-
carbon technologies improves and countries start to see the success of their low-carbon
policies. The strategy set out in the Bridge Scenario can keep the 2 °C climate goal within
reach in the near-term, but goals beyond 2025 need to be strengthened in due course.
Agreeing a mechanism at COP21 that will permit reviewing the level of ambition every five
years will regularly shine a light on progress, and send a clearer message to investors of the
long-term commitment to the full extent of the necessary decarbonisation.
A transformation of the world’s energy system must become a uniting vision if the 2 °C 12
climate goal is to be achieved. The challenge is stern, but a credible vision of the long-term
decarbonisation of the sector is available to underpin shorter term commitments and the
means to realise it can, ultimately, be collectively adopted. The world must quickly learn to 13
live within its means if this generation is to pass it on to the next with a clear conscience.
14
15
16
17
18
Executive Summary 15
Chapter 1
Highlights
• The 21st Conference of the Parties of the UNFCCC meets in Paris in December
2015 with the aim of adopting a new global agreement to limit greenhouse-gas
emissions. The ultimate objective already adopted by governments is to limit global
warming to an average of no more than 2 °C, relative to pre-industrial levels. This
must involve the transformation of the energy sector, as it accounts for roughly
two-thirds of all anthropogenic greenhouse-gas emissions today.
• Global energy-related CO2 emissions stayed flat in 2014 (at an estimated 32.2 Gt)
despite an increase of around 3% in the global economy. This is the first time in at
least 40 years that a halt or reduction in emissions has not been tied to an economic
crisis. Across the OECD, emissions continued to decouple from economic growth in
2014. China’s emissions figures give early signs of a weakening in the link between
economic and emissions growth, albeit not yet a detachment.
• Renewable energy investment was flat in 2014 at $270 billion, with new capacity of
128 GW installed, representing almost half of total capacity additions. Wind power
accounted for 37% and solar for almost another third. The first commercial power
plant with CO2 capture came online in 2014. Nuclear capacity of 74 GW was under
construction at the end of 2014. Estimates for 2014 indicate that global energy
intensity decreased by 2.3% relative to the previous year, more than twice the
annual rate of the last decade.
• Carbon markets covered 11% of global energy-related emissions in 2014 and the
average price was $7 per tonne of CO2. In contrast, 13% of CO2 emissions were
linked to fossil-fuel use supported by consumption subsidies, equivalent to an
implicit subsidy of $115 per tonne of CO2. However, several countries, including
India, Indonesia, Malaysia and Thailand, used the opportunity of lower oil prices to
reform fossil-fuel subsidies.
• Over the past century, annual emission levels increased at an ever higher rate: the
energy sector emitted as much CO2 over the last 27 years as in all the previous
years. The global distribution of CO2 emissions has also shifted: at the beginning of
the 20th century, emissions originated almost exclusively in the United States and
Europe, while today together they account for less than 30%.
• Success at the UN climate summit in December 2015 hinges on how new national
pledges to reduce emissions can be integrated into an international framework.
As of 14 May 2015, Switzerland, European Union, Norway, Mexico, United States,
Gabon, Russia, Liechtenstein and Andorra, together accounting for 34% of energy-
related CO2 emissions, had submitted their pledges.
The 196 Parties to the United Nations Framework Convention on Climate Change
(UNFCCC) agreed a long-term global objective, as part of the package of decisions at
COP16 in Cancun in December 2010. Under the Cancun Agreement, Parties formally
recognised that they should take urgent action to meet the long-term goal of holding
the increase in global average temperature below 2 °C relative to pre-industrial levels,
and that deep cuts in global greenhouse-gas emissions are required to achieve this.
The Cancun decision formalised the political agreement to a below 2 °C goal which
had been made a year earlier at COP15 in Copenhagen by a smaller set of countries.
The Cancun Agreement also set in motion a review of the adequacy of this newly
established long-term global goal as a means of achieving the ultimate objective of the
UNFCCC (“to avoid dangerous anthropogenic interference with the climate system”),
and whether it should be further strengthened, including consideration of a 1.5 °C
temperature goal. This review, to be concluded in 2015, will inform discussion of this
issue in the COP21 process.
The long lifetime of greenhouse gases means that it is the cumulative build-up in the
atmosphere that matters most. In its latest report, the Intergovernmental Panel on
Climate Change (IPCC) estimated that to preserve a 50% chance of limiting global warming
to 2 °C, the world can support a maximum carbon dioxide (CO2) emissions “budget” of
3 000 gigatonnes (Gt) (the mid-point in a range of 2 900 Gt to 3 200 Gt) (IPCC, 2014), of
which an estimated 1 970 Gt had already been emitted before 2014. Accounting for CO2
emissions from industrial processes and land use, land-use change and forestry over the
rest of the 21st century leaves the energy sector2 with a carbon budget of 980 Gt (the mid-
point in a range of 880 Gt to 1 180 Gt) from the start of 2014 onwards. The carbon legacy
1. This refers to the concentration of all greenhouse gases, including cooling aerosols.
2. Energy sector in this chapter refers to energy supply, energy transformation (including power generation) and energy-
consuming sectors (including buildings, industry, transport and agriculture).
The path towards a new agreement at COP21 began in 2009 with the attempt at COP15
2
in Copenhagen to develop a successor to the Kyoto Protocol, which was negotiated in
1997 and is still in effect but is expected to cover only 10% of global GHG emissions by 3
2020. While COP15 failed to achieve a binding treaty, it did result in some pivotal political
outcomes: an agreed definition, subsequently universally adopted, of the objective to keep 4
the long-term global average temperature increase below 2 °C; the principle that both
developed and developing countries should undertake nationally appropriate actions to 5
reduce emissions; and a commitment to make available $100 billion per year of public
and private climate finance to developing countries by 2020, mainly through the Green
Climate Fund.3 Moreover, under the Copenhagen Accord, countries accounting for around
6
80% of GHG emissions made pledges to mitigation goals and actions for the period to 2020,
marking a major improvement on the Kyoto Protocol. 7
Negotiations towards a new legal agreement for the post-2020 period started in 2011 at
COP17 in Durban, South Africa. The new agreement is to apply to the 196 Parties to the
8
UNFCCC and to be adopted by 2015. By 2014 at the time of COP20 in Lima, Peru, the
new agreement was beginning to take shape. Countries agreed to communicate so-called 9
Intended Nationally Determined Contributions (INDCs), their pledged actions under the new
agreement, well in advance of COP21 and in a manner that is clear, transparent and facilitates 10
understanding.
All UNFCCC Parties will come together at COP21 in December 2015 in an attempt to 11
bring these negotiations to a successful conclusion. A strong agreement is required to
provide a clear signal that all countries are committed to decarbonisation and to convince 12
energy sector investors that they need to adopt low-carbon options. The submission by
individual countries of their own climate contribution to the 2015 agreement (INDCs)
will form the core “bottom-up” element of the climate deal to be agreed at COP21 (see
13
Chapter 5). The INDCs will apply to a period starting in 2021 and are expected to represent
“a progression beyond the current undertaking of that Party” (UNFCCC, 2015). This follows 13
the Copenhagen Accord of 2009, in which participating countries for the first time pledged
to undertake specific actions to mitigate GHG emissions. There is no agreed form regarding 13
the structure or content of INDCs: guidance exists, but the actual scope – whether they are
to include e.g. mitigation, adaptation, finance, technology development and transfer, and 14
capacity-building components – is open. INDCs are generally expected to have a mitigation
component, but they are likely to take a variety of forms, since they will reflect differences
in national circumstances, capabilities and priorities.
16
17
3. As of mid-April 2015, $10.2 billion had been made available to the Fund. The UNFCCC estimates that total climate 18
finance flows from developed to developing countries range from $40 to $175 billion per year (UNFCCC, 2014).
Against this background, this chapter reviews recent developments in the energy sector
and in carbon markets and analyses energy sector CO2 emissions in 2014 in the context of
historical emissions trends. It concludes by providing an overview of the three scenarios
that are used in subsequent chapters to illustrate the potential energy sector contribution
to a successful outcome of the COP21 negotiations.
Recent developments
An important change in the energy sector from 2014 to 2015 has been the rapid drop in
world oil prices and, to a lesser extent, natural gas and coal prices. After a prolonged period
of high and relatively stable prices, oil dropped from over $100 per barrel in mid-2014 to
below $50 in early-2015. Natural gas prices also declined, but the pace and extent depended
on prevailing gas pricing mechanisms and other regional factors: in the United States they
fell from $4 per million British thermal units (MBtu) in mid-2014 to below $3/MBtu in
early-2015; German import prices moved below $8/MBtu from $8.5/MBtu during the
summer of 2014, while average Japan liquefied natural gas (LNG) import prices (a weighted
average of long-term contracts and spot trading) declined to around $15/MBtu from
$16/MBtu in mid-2014. Coal prices in northwest Europe declined from $73 per tonne (t) in
mid-2014 to around $60/t at the start of 2015 due to persistent overcapacity in the market.
The projections in this World Energy Outlook (WEO) Special Report incorporate updated
energy price trajectories that reflect recent developments. As a result, fossil-fuel prices in
the near term are lower than in the WEO-2014, but we do not assume these lower prices
will be permanent.
Hydro
120 60%
Wind
100 50% Solar PV
Share of total additions
80 40% (right axis)
60 30%
40 20%
20 10%
Carbon capture and storage (CCS) achieved an important milestone in 2014, with Boundary
Dam unit 3 (net capacity of 120 megawatts) in Canada becoming the first commercial power
plant to come online with CO2 capture. The 22 large-scale CCS projects either in operation
or under construction have a collective CO2 capture capacity of around 40 million tonnes
(Mt) per year (Global CCS Institute, 2015). The present pace of progress, however, falls
short of that needed in order to achieve the pace and scale of CCS deployment necessary
to achieve a 2 °C pathway (see Chapter 4).
Any period of lower energy prices can result in neglect of action to promote energy efficiency
and the return of more profligate consumption. However, there is no evidence, as yet,
that this is occurring. Preliminary estimates for 2014 indicate that global energy intensity
– measured as the amount of energy required to produce a unit of GDP – decreased by
2.3% relative to the previous year, more than double the average rate of change over the
last decade. This was the joint result of energy efficiency improvements and structural
changes in the global economy. A major driver of the global change was the 8% reduction
in energy intensity in China.5
5. The change in primary energy intensity is higher than the official Chinese number (-5%) mainly because the IEA uses
the energy content method and Chinese authorities use the partial substitution method for renewables.
In North America, California’s ETS has been part of the Western Climate Initiative (WCI) 13
since 2007 and a formal link to Québec’s scheme was established in 2014, creating a broader
market. Since January 2015, the ETS covers around 85% of California’s GHG emissions. The 14
emissions cap applied under the Regional Greenhouse-Gas Initiative (RGGI) operated by
states in the northeast United States was revised down by 45% in 2014 and will be reduced
by a further 2.5% per year from 2015 to 2020. Elsewhere, low-priced international credits
16
prompted a price collapse in New Zealand’s ETS, while Australia abolished its carbon pricing
mechanism. 17
6. Next to emission trading systems, other carbon pricing instruments, such as carbon taxes, exist or are planned in 18
39 national and 23 sub-national jurisdictions (World Bank, 2014).
ssia 1.7 Gt
Ru
China 8.6 Gt
America 6.2 $107/t
rth Gt n Union 3
No pea .2
ro 21%
$8/t
Eu
Gt
CaspG
ian
0.5 t
60%
$6/t
$2/t $102/t
34% 52% $29/t pan 1.2 Gt
Ja
$9/t $36/t le East 1.7
idd $173/t
15%
8%
Gt
M
4% 4%
ia 2.0 Gt $66/t
rica 1.1 Gt Ind
Af 63%
er Asia 1.9 G 2%
$168/t th
World Energy Outlook | Special Report
t
eric
Am a 1. $104/t $68/t
n 33%
2G
i
Lat
$208/t 15%
27% stralia an
Auw Zealan d
26% e .4 Gt
0
d
$3/t
15%
Gt $/t $/t
CO2 emissions from subsidised
CO2 emissions from fossil-fuel combustion % CO2 emissions covered by ETS and CO2 prices % fossil fuels and implicit CO2 subsidy
Notes: The implicit CO2 subsidy is calculated as the ratio of the economic value of those subsidies to the CO2 emissions released from subsidised energy consumption. ETS = emissions
trading scheme.
Historical energy emissions trends
1
One indicator of the scale of the challenge to the energy sector is the fact that the total
volume of global energy sector CO2 emissions over the past 27 years matched the total level
2
of all previous years. Fossil fuels continue to meet more than 80% of total primary energy
demand and over 90% of energy-related emissions are CO2 from fossil-fuel combustion
(Figure 1.3). Since 2000, the share of coal has increased from 38% to 44% of energy-related
3
CO2 emissions, the share of natural gas stayed flat at 20% and that of oil declined from
42% to 35% in 2014. While smaller in magnitude (and less long-lasting in the atmosphere, 4
though with higher global warming potential), methane (CH4) and nitrous oxide (N2O) are
other powerful greenhouse gases emitted by the energy sector. Methane accounts for 5
around 10% of energy sector emissions and originates mainly from oil and gas extraction,
transformation and distribution. Much of the remainder is nitrous oxide emissions from
6
energy transformation, industry, transport and buildings.
7
Figure 1.3 ⊳ Global anthropogenic energy-related greenhouse-gas
emissions by type
8
50 100% N2O
Gt CO2-eq
12
10 20%
13
1985 1990 1995 2000 2005 2010 2014
Notes: CO2 = carbon dioxide, CH4 = methane, N2O = nitrous oxide. CH4 has a global warming potential of 28 to 30 times
13
that of CO2, while the global warming potential of N2O is 265 higher than that of CO2.
Sources: IEA and EC/PBL (2014). 13
The global distribution of GHG emissions has shifted with changes in the global economy 14
(Figure 1.4). At the beginning of the 20th century, energy-related CO2 emissions originated
almost exclusively in Europe and the United Sates. This ratio dropped to around two-thirds 16
of total emissions by the middle of the century and today stands at below 30%.
17
18
1890-1919
50
Gt
1920-1949
100
Gt
50
1950-1979
150
Gt
100
50
1980-2014
250
Gt
200
150
100
50
Notes: Emissions for the European Union prior to 2004 represent the combined emissions of its current member states.
Emissions for Russia prior to 1992 represent emissions from the Union of Soviet Socialist Republics. Rest of world
includes international bunkers.
Sources: Marland, Boden and Andres (2008) and IEA (2014a).
Over the past two-and-a-half decades, global CO2 emissions increased by more than
50% (Figure 1.5). While emissions increased by 1.2% per year in the last decade of the
20th century, the average annual rate of increase between 2000 and 2014 accelerated to
2.3%, particularly driven by a rapid rise in CO2 emissions in power generation in countries
35 21
7
Other
Gt
Gt
30 Buildings 18
Transport 8
25 Industry 15
20 Power
generation
12 9
15 9
10
10 6
5 3 11
1990 1995 2000 2005 2010 2014 1990 2014
OECD
1990 2014
Non-OECD
12
Notes: “Other” includes agriculture, non-energy use (except petrochemical feedstock), oil and gas extraction and energy
transformation. International bunkers are included in the transport sector at the global level but excluded from the 13
regional data.
13
A large share of energy-related CO2 emissions comes from a small number of countries. In
2012, three countries – China, United States and India – gave rise to almost half of global 13
CO2 emissions from fossil-fuel combustion, while ten countries7 accounted for around
two-thirds (IEA, 2014a). Since 1990, total emissions in the United States and Japan have 14
increased slightly, while they declined by about a fifth in the European Union. After a fall of
almost 30% in emissions from Russia in the early 1990s, the emissions increase thereafter
16
has remained limited. In 2006, China overtook the United States as the biggest CO2 emitter,
while India overtook Russia as the fourth-largest emitter in 2009 (Figure 1.6).
17
18
7. The ten countries are China, United States, India, Russia, Japan, Germany, Korea, Canada, Iran and Saudi Arabia.
10
Gt
China
8
6
United States
4
European Union
2 India
Russia
Japan
Even though CO2 emissions increased almost three-fold in China and two-and-a-half times
in India between 1990 and 2014, per-capita emissions in both countries are still below the
average level in OECD countries. China’s per-capita emissions in 2014 reached 6.2 tonnes,
matching the level of the European Union, but a third lower than the OECD average
(Figure 1.7). India’s per-capita emissions were 1.6 tonnes in 2014, or about 10% of the level
in the United States and 25% of the level in China. Significant differences across regions
exist, not only in terms of per-capita emissions but also in terms of CO2 emissions per
unit of economic output. While all of the major regions reduced the CO2 intensity of their
economy, China emitted 0.82 tonnes CO2 per thousand dollars of economic output in 2014,
which compares to 0.3 tonnes in the United States and 0.18 tonnes in the European Union.
1990
2.0
2014
1.6
1.2
China Russia
0.8 India
United States
0.4
European Japan
0 3 6 9 12 15 18 21
t/capita
Notes: Bubble area indicates total annual energy-related CO2 emissions. MER = market exchange rate.
15 1990-2007
6
Gt
OECD 2010-2014
12 7
9
China
Rest of world 8
6
9
3
10
0 10 20 30 40 50
Trillion dollars ($2013, MER)
11
Note: MER = market exchange rate.
12
Energy-related CO2 emissions in the European Union dropped by more than 200 Mt (over
6%), as demand for all fossil fuels declined: natural gas demand declined by 12%, partly 13
due to the mild winter, while power generation from non-hydro renewables grew by 12%
as they continued to benefit from active decarbonisation policies (Figure 1.9). Japan’s 13
CO2 emissions are estimated to have been down by around 3% in 2014 relative to 2013,
mainly due to lower oil demand; but LNG imports remained at a comparably high level, as
13
a consequence of the shutdown of Japan’s nuclear capacity. In the United States, energy-
related CO2 emissions in 2014 were 41 Mt higher (less than 1%) than the previous year
but were around 10% below their peak in 2005 (5.7 Gt). Emissions from the power sector 14
in the United States were down, due to an 11% increase in generation from non-hydro
renewables and only a limited increase in electricity demand, while there was an increase 16
in natural gas use in industry and buildings.
17
Placed in the context of recent trends, China’s emission figures in 2014 are also consistent
with a weakening of the link between economic growth and increased emissions, though it is
18
not yet broken. Emissions in China declined in 2014 for the first time since 1999, registering
CO2 emissions outside the OECD and China were up by around 290 Mt in 2014, led by
increased use of coal for power generation in India and Southeast Asia. Indeed, across
most emerging and developing countries, the relationship between economic growth and
emissions growth remains strong as these countries are in the energy-intensive process of
building up their capital stock.
The signs of a decoupling between energy-related emissions and economic growth in some
parts of the world are encouraging – for the first time in 40 years, a halt or reduction in
total global emissions has not been associated with an economic crisis. However, definitive
conclusions cannot be drawn from the data for a single year. Part of the reduction in
emissions in 2014 in the European Union, for example, was due to warmer weather which
significantly reduced CO2 emissions related to heating. Nonetheless, there are positive signs
that committed climate action has the potential to achieve such a decoupling, creating a
8. The National Bureau of Statistics in China is in the process of revising its historical coal use upwards. This revision has
not been incorporated within this study as a full energy balance is not yet available. While this revision will change the
absolute level of emissions, it is not expected to affect significantly the relative change vis-à-vis 2013.
Note: This table contains all contributions that had been submitted to the UNFCCC by 14 May 2015 and is in the order
in which they have been submitted.
One measure of the success of COP21 will be the extent to which it carries to energy
sector stakeholders a conviction that the sector is destined to change. An important
symbol of such change would be achieving a peak in global energy-related GHG emissions.
Identifying ways to facilitate such an achievement at an early date is the purpose of the
Bridge Scenario (see Chapter 3 for details). The objective is to facilitate adoption by each
country or region individually and using only existing technology of a pragmatic near-term
strategy that is compatible with the same level of development and economic growth
that underlies the energy sector policies and climate pledges which are reflected in the
INDC Scenario. For countries which have already submitted their INDCs, the objective is
to identify policies which permit yet higher levels of climate ambition. For countries which
have not yet brought forward their INDCs, the purpose is to support ambitious target
setting. This scenario is not, in itself, a pathway to the 2 °C target – additional technology
and policy needs for such a pathway are set out in the 450 Scenario. But it indicates a
strategy for near-term action as a bridge to higher levels of decarbonisation at a later stage
compatible with the 2 °C goal.
The 450 Scenario takes a different approach (see Chapter 4 for details). It adopts a
specified outcome – achievement of the necessary action in the energy sector to serve the
internationally adopted goal to limit the rise in long-term average global temperature (with
a likelihood of around 50%) to 2 °C – and illustrating steps by which that might be achieved.
Near-term policy assumptions for the period to 2020 draw on measures that were defined
in the Redrawing the Energy-Climate Map: WEO Special Report (IEA, 2013), and welcomed
by energy ministers who attended the IEA Ministerial meeting in 2013. Significant action
beyond these measures and before 2020 is less likely, as this is the earliest date by which
any agreement reached at COP21 could be expected to take effect.
The projections in all scenarios are sensitive to the underlying assumptions about the rate 7
of GDP growth in each region. World GDP is assumed to grow at an average annual rate of
3.5% from 2013 to 2040. This means that the global economy is about two-and-a-half times 8
the present level at the end of the projection period. The Bridge Scenario is built on the
foundation that it is compatible with the level of development and economic growth that 9
underlies current energy sector policies and climate pledges. The level of population, another
important driver for the demand for energy services in all scenarios, is projected to grow by
0.9% per year on average, from an estimated 7.1 billion in 2013 to 9.0 billion in 2040.12
10
While the assumptions on economic and population growth are the same, energy price
11
paths vary across the three scenarios, in part due to differences in the strength of policies
to address energy security and environmental challenges, and their respective impacts on
supply and demand. The extent of carbon pricing schemes and the level of CO2 prices 12
vary across the scenarios, according to the assumed degree of policy intervention to curb
growth in CO2 emissions. It is assumed in each scenario that all existing carbon trading 13
schemes and taxes are retained and that the price of CO2 rises throughout the projection
period. In the INDC Scenario, the CO2 price in the European Union increases from less 13
than $8/tonne in 2014 to $53/tonne (in year-2013 dollars) in 2030, while for China it is
assumed that a national CO2 price is introduced in 2020, rising to $23/tonne by 2030. In the
13
450 Scenario, it is assumed that carbon pricing is eventually adopted in all OECD countries
and that CO2 prices in most of these markets reach $140/tonne in 2040. Several major
non-OECD countries are also assumed to put a price on carbon in the 450 Scenario, with 14
prices rising to a slightly lower level in 2040 than in OECD countries.
16
Highlights
• The Intended Nationally Determined Contributions (INDCs) submitted by countries
in advance of COP21 are to form the core of collective and increasingly ambitious
climate action. A first assessment of the impact of INDCs on the energy sector is
presented here in an “INDC Scenario”. An update, including the latest INDCs, will be
published in November 2015, during the IEA Ministerial meeting.
• In the INDC Scenario, national pledges have a positive impact in slowing the growth
in global energy-related emissions but they continue to rise from 2013 to 2030.
The link between economic growth and energy-related GHG emissions weakens,
with the global economy growing by 88% and energy-related CO2 emissions by 8%
(reaching 34.8 Gt). The share of fossil fuels in the world energy mix declines but
is still around 75% in 2030. The rate of growth in coal and oil demand slows but
volumetric demand does not decline, while gas use marches higher. Renewables
become the leading source of electricity by 2030, but subcritical coal-fired capacity
declines only slightly. The carbon intensity of the power sector improves by 30%.
• The United States achieves major cuts in energy-related GHG emissions by 2025 in
the INDC Scenario. The US power sector delivers 60% of the savings (renewables and
coal-to-gas switching) and fuel-economy standards in transport much of the rest.
In the European Union, a strong shift to renewables and greater energy efficiency
sees fossil fuel use drop by more than 20% by 2030, making it one of the world’s
least carbon-intensive energy economies. Russia’s energy-related CO2 emissions
decline slightly and it meets its 2030 target comfortably. Mexico’s energy-related
CO2 emissions increase slightly but at a much slower rate than the economy.
• The growth in China’s energy-related CO2 emissions slows and then peaks
around 2030. Though it remains the largest emitter by far in 2030, the energy
sector diversifies, becoming more efficient as well as less carbon intensive. India
makes a push to build-up renewables capacity and improves energy efficiency, in
parallel with efforts to make modern energy available to more of the population
and improve reliability of supply. Very rapid growth in energy demand boosts
related CO2 emissions by around 65% by 2030, but per-capita levels remain low.
• Neither the scale nor the composition of energy sector investment in the INDC
Scenario is suited to move the world onto a 2 °C path. The estimated remaining
carbon budget consistent with a 50% chance of keeping below 2 °C is consumed
by around 2040 – only eight months later than expected in the absence of INDCs.
If stronger action is not forthcoming, the INDC Scenario is judged to be consistent
with a global temperature increase of around 2.6 °C in 2100 and 3.5 °C after 2200.
As shown in Chapter 1, energy production and use accounts for around two-thirds of global
GHG emissions today, of which carbon dioxide (CO2) is the great majority (Table 2.1). As
of 14 May 2015, countries accounting for 34% of global energy-related emissions had
submitted their INDCs. Some other countries such as China had not submitted their INDCs
but had otherwise clarified their intended post-2020 actions on climate change. These
INDCs and stated policy intentions (together with previous policy declarations by countries
which have yet to disclose their latest intentions) provide a basis upon which to conduct
an initial assessment of their impact on future energy and emissions trends. While this
assessment can only be indicative rather than definitive, it still provides crucial insights for
decision makers in the preparations for the climate summit in December 2015. The IEA will
publish timely updates of INDC analysis, incorporating new INDC submissions, in the lead
up to COP21.
In the INDC Scenario, annual global energy- and process-related GHG emissions grow from
37.5 gigatonnes of carbon-dioxide equivalent (Gt CO2-eq) in 2013 to 40.6 Gt CO2-eq by 2030.
If stronger action were not forthcoming after 2030, the emissions path in the INDC Scenario
1. Tables containing detailed projection results for the INDC Scenario by region, fuel and sector are available at
www.worldenergyoutlook.org/energyclimate.
There is no peak in sight for world energy-related CO2 emissions in the INDC Scenario: they 4
are projected to be 8% higher than 2013 levels in 2030 (reaching 34.8 gigatonnes [Gt]),
while primary energy demand grows by around 20% (Figure 2.1) and the global economy is 5
around 88% larger. In a 450 Scenario – which reflects a pathway consistent with around a
50% chance of meeting the 2 °C climate goal – energy-related CO2 emissions are already in
decline by 2020. By 2030, there is around a 9 Gt gap between energy-related emissions in
6
the INDC Scenario and the 450 Scenario.
7
Figure 2.1 ⊳ Global primary energy demand and related CO2 emissions by
scenario 8
18 000 Primary energy demand: 9
Mtoe
INDC Scenario
15 000 450 Scenario
9 000 36
450 Scenario
11
Gt
6 000 24 12
3 000 12
13
1990 2000 2010 2020 2030
13
Note: Mtoe = million tonnes of oil equivalent; Gt = gigatonnes.
13
The transition away from fossil fuels is gradual in the INDC Scenario, with the share
of fossil fuels in the world’s primary energy mix declining from more than 80% today 14
to around three-quarters in 2030 (Figure 2.2). World demand for coal shows signs of
16
17
2. The temperature estimate has been derived with MAGICC6, a climate carbon cycle model. The emissions trajectory
post-2050 is between the representative concentration pathways (RCP) 4.5 and RCP 6 Scenarios from the IPCC’s 18
5th Assessment Report.
18 000 30%
Other renewables
Mtoe
Bioenergy
15 000 25%
Hydro
Nuclear
12 000 20%
Gas
Oil
9 000 15%
Coal
Share of low-carbon
6 000 10% sources (right axis)
3 000 5%
Note: “Other renewables” includes wind, solar (photovoltaic and concentrating solar power), geothermal, and marine.
The projected path for energy-related emissions in the INDC Scenario means that, based
on IPCC estimates, the world’s remaining carbon budget consistent with a 50% chance of
keeping a temperature increase of below 2 °C would be exhausted around 2040, adding
a grace period of only around eight months, compared to the date at which the budget
would be exhausted in the absence of INDCs (Figure 2.3). This date is already within the
lifetime of many existing energy sector assets: fossil-fuelled power plants often operate
for 30-40 years or more, while existing fossil-fuel resources could, if all developed, sustain
production levels far beyond 2040. If energy sector investors believed that not only new
investments but also existing fossil-fuel operations would be halted at that critical point,
this would have a profound effect on investment even today.
2
40 100% Energy-related
Gt
emissions
3
32 80% Remaining global
carbon budget
(right axis)
4
24 60%
5
16 40%
6
8 20%
7
1890 1910 1930 1950 1970 1990 2010 2040
8
Sources: IPCC and IEA data; IEA analysis.
9
The power sector continues to be the world’s dominant fossil-fuel consumer and source
of energy-related CO2 emissions in the INDC Scenario, accounting for 42% of the energy
10
sector total in 2013, with a decrease to just below 40% in 2030. A push towards renewables
in many markets and greater levels of efficiency, in the power sector and in the use of
electricity, both play an important role in helping to mitigate power sector emissions in the 11
INDC Scenario. Renewables expand across regions, but the nature of this expansion varies.
In the United States and the European Union, it occurs largely at the expense of ageing 12
fossil-fuelled capacity that is retired. In China, India and many other developing countries,
expansion of renewable capacity goes hand-in-hand with efforts to expand energy supply 13
also from other sources, to keep up with rapidly increasing demand. In Brazil, reliance
on hydropower shifts gradually towards increased use of wind, solar and biomass. In
Africa, renewables play an important role in increasing access to energy, both to those on
13
the main grid and those who benefit from distributed forms of electricity supply. In the
Middle East, the uptake of renewables helps to stem the increase in domestic use of fossil 13
fuels in the power sector. The global carbon intensity of the power sector improves in the
INDC Scenario – going from 528 grammes of CO2 per kilowatt-hour (g CO2/kWh) in 2013 14
to 370 g CO2/kWh in 2030 – as the oldest, least efficient and often most polluting fossil-
fuelled plants are retired and more efficient and more low-carbon supply enters the system.
Carbon capture and storage (CCS), a potentially important abatement option, achieves no
16
more than marginal penetration to 2030 (see Chapter 4 for more on CCS).
17
Increased efficiency measures across sectors in the INDC Scenario reduce the energy used
to provide energy services, without reducing the services themselves. For example, both
18
the fuel efficiency of new passenger light-duty vehicles (PLDVs) and their average emissions
3. Energy efficiency investment is defined as the additional expenditure made by energy users to improve the
performance of their energy-using equipment above the average efficiency level of that equipment in 2012.
9
Regional trends
While OECD countries have accounted for a major share of historical energy-related 10
emissions, this picture has been changing rapidly in recent decades and continues to
shift in the INDC Scenario, with the non-OECD share of total global emissions increasing 11
from less than 60% in 2013 to nearly 70% in 2030. In per-capita terms, however, levels
in the OECD (7 tonnes CO2/capita per year) are projected to still far-exceed the average
12
non-OECD per-capita level – the OECD level being nearly double the non-OECD average in
2030 – although significant national disparities occur within both groups (Figure 2.5).
13
United States
13
Within its INDC, the United States declares its intention to reduce its net GHG emissions4 to
26% to 28% below 2005 levels in 2025 and to make best efforts to achieve the upper end of
this range. This builds on its commitment in the Copenhagen Accord to reduce emissions to 13
17% below 2005 levels by 2020. The US INDC sets the 2025 target in the context of a longer
range, collective intention to move to a low-carbon global economy as rapidly as possible, 14
and keep the United States on a path to achieving 80% reductions or more by 2050. Energy
and climate policies introduced in recent years are already having a material impact on 16
the projected emissions trajectory for the United States and the INDC target builds on a
number of existing and proposed plans and policies, such as the Climate Action Plan, the
17
4. Net greenhouse-gas emissions include emissions from land use, land-use change and forestry (LULUCF), which are a 18
net sink in the United States, meaning that emissions from LULUCF are negative.
Middle East
8.2
Korea Japan
9.4 7.3
China
United States 7.1
10.9
Caspian
6.0
450
Russia Scenario
12.0 World
3.0
Africa European
0.9 Union
4.7
India
2.1 Mexico
Latin 3.4
America Southeast
2.5 Asia
1 tonne of CO2 2.7
As of 2013, the United States was around 35% of the way towards the lower-end (26%)
of its 2025 emissions reduction target, while seeing its economy grow by around 10%
since 2005. Between 2005 and 2013, net GHG emissions were reduced by 547 million
tonnes of carbon-dioxide equivalent (Mt CO2-eq), at a pace of around 60 Mt CO2-eq per
year. Energy-related CO2 emissions accounted for all of the net reductions, with around 60%
coming from the power sector, mainly as a result of lower natural gas prices encouraging
coal-to-gas switching, increasing contributions from renewables and, to a much lesser
extent, coal plants being retired in anticipation of the Mercury and Air Toxics Standards
5. The US Environmental Protection Agency (EPA) has proposed a Clean Power Plan for Existing Power Plants and Carbon
Pollution Standards for New, Modified and Reconstructed Power Plants. The EPA is expected to issue final rules in
mid-2015.
Power
0 Transport
Buildings
-0.4 Methane emissions: 10
Oil and gas
-0.8
All GHG emissions:
Industry
11
-1.2
Other
-1.6 INDC target range 12
-2.0
13
-2.4
2005 2010 2015 2020 2025 2030
13
Notes: INDC target range reflects the US INDC intention to reduce GHG emissions 26% to 28% below 2005 levels in 2025.
Power, transport and buildings show change in CO2 emissions, oil and gas shows the change in CH4 emissions from oil
and gas production and its transportation (presented in CO2-eq terms). Industry (including industrial process emissions) 13
and “Other” show the change in all GHG emissions, including agriculture and waste.
Emissions from the energy sector in the United States are on a clear declining trajectory 14
in 2025, led by reductions from coal and oil, and a stabilisation in those from natural gas
at levels only a little higher than today. US oil demand remains relatively flat through to 16
2020, but starts to drop after this date – around 2% per year – due largely to tightening
fuel-economy standards and increasing use of biofuels. By 2025, oil demand is 1.6 mb/d 17
lower than in 2013 and it is projected to continue to decline thereafter. A combination of
fuel-economy standards and biofuels acting on demand and higher domestic oil production
18
sees US net oil imports decline from 7.3 mb/d in 2013 to 4 mb/d by 2025 and the related
Power sector
In the INDC Scenario, electricity demand in the United States increases by just 9% from 2013
to 2025, as energy efficiency efforts slow growth over time. Power sector CO2 emissions
are projected to be 865 million tonnes (Mt) lower in 2025 (relative to 2005 levels). This
decline is largely driven by policies linked in some way to the Clean Power Plan (which
aims to reduce power sector CO2 emissions to 30% below 2005 levels by 2030) and efforts
to improve power sector efficiency and end-use efficiency (reducing electricity demand).
Coal-fired capacity declines by more than 20% by 2025 (Figure 2.7), as new additions are
limited to the highest efficiency, CCS-ready technologies and the oldest and least-efficient
existing capacity is retired. However, on a 2 °C path, the long-term trajectory for coal
hangs heavily on the development and deployment of CCS technology, which, if pursued
successfully, could secure a more positive outlook for coal while remaining consistent with
climate goals (see Chapter 4).
150 Additions
GW
Retirements
100 2004-2014
2015-2025
50
-50
-100
Gas Coal CCS Nuclear Wind and solar
Wind leads the growth in renewables-based capacity in the United States in the
INDC Scenario, averaging over 6 gigawatts (GW) per year to 2025, while solar technologies
average around 5 GW per year, with solar photovoltaic (PV) accounting for the vast majority.
End-use sectors 5
Total final energy consumption in the United States is projected to be at a level similar to
2013 in 2025, while the related emissions decline. In the transport sector, tougher fuel- 6
economy standards for passenger vehicles and heavy trucks build on the improvements
that have already been achieved, making the sector the second-largest contributor to 7
emissions reductions in the INDC Scenario (310 Mt – 17% – lower in 2025 than 2005).
US Corporate Average Fuel Economy (CAFE) standards for PLDVs (54.5 miles per gallon 8
[23.2 kilometres per litre] by 2025) significantly reduce oil demand, while policies to reduce
average on-road fuel consumption by trucks help push emissions per kilometre down by
around one-quarter, relative to 2013. From 2020 onwards, total transport emissions in
9
the United States decline by around 2% per year, on average. In line with the targets set
in the Renewable Fuel Standard Program, demand for biofuels increases by 80% to reach 10
1.1 mb/d in 2025, of which around 90% is ethanol and the remainder biodiesel. In the same
time frame, the United States sees sales of electric vehicles (including plug-in hybrids and 11
battery-electric vehicles) increase to around 1.5 million, while the use of natural gas for
fleet vehicles and trucks also sees significant growth from today’s low levels. 12
Energy efficiency plays an important role across other end-use sectors, with a combination
of policies serving to tighten existing efficiency standards, encourage greater adoption of 13
energy-efficient equipment (such as tax credits for energy-efficient equipment in buildings)
and help to push efficiency levels higher through innovation. For example, several large
13
industrial energy users have committed to reduce their energy intensity by 25% over a
ten-year period under the Better Buildings, Better Plants Program, while the long-standing
Energy Star Program continues to improve energy efficiency for appliances, through 13
research, labelling and communication.
14
Other gases
Methane emissions accounted for nearly 15% of US GHG emissions in 2013, of which 16
around 30% came from the production, transmission and distribution of oil and natural
gas. Methane emissions from the oil and gas sector increased by around 50 Mt CO2-eq from 17
2005 to 2013, meaning that there is a need to save nearly 100 Mt CO2-eq to meet the low
end of the stated US policy goal (40% to 45% reductions by 2025, relative to 2012 levels). To
do this requires a combination of actions including regulation and monitoring, investment
18
Investment
In the INDC Scenario, energy supply investment in the United States averages around
$255 billion per year through to 2025, nearly 30% higher than the average since 2000. This
reflects the need to replace ageing power plants that are due to retire and a continuation
of the shift in power sector investment ($86 billion per year to 2025) away from coal and
towards gas and renewables. Upstream oil and gas continue to require significant investment
(around $125 billion per year collectively), while coal supply investment gradually declines.
Projected investment in energy efficiency (around $100 billion per year) is a clear step up
from historical levels. Efficiency investment increases in industry, but investment in CCS
does not grow significantly by 2025. Efficiency investments in transport double over the
period to 2025, while investments in buildings increase even more rapidly, accounting for
around 55% of all efficiency investments in the United States to that year.
European Union
The INDC of the European Union (EU) sets out a binding target to reduce domestic GHG
emissions by at least 40% in 2030, compared with 1990 levels. The target is based on the
European Union’s 2030 framework for energy and climate policies, which also sets out targets
to increase the share of renewable energy to at least 27% (of final energy consumption) and to
improve energy efficiency by at least 27% (relative to a projected reference level in 2030); but
these elements are not formally part of the EU INDC. The European Union’s own assessment
of the effects of the 2030 framework indicates that CO2 emissions from the energy sector
will fall by around 37% and non-CO2 greenhouse gases by around 55% (EC, 2014).6 The 2030
framework builds on the target to reduce EU GHG emissions by 20% by 2020, which the EU
is on track to meet, with energy sector CO2 emissions in 2014 being around 22% below 1990
levels and per-capita emissions 27% lower. At the same time, the economy has grown by
almost 50%, reflecting the continued decoupling of emissions from economic growth. Both
the 2020 and 2030 emissions targets represent important milestones towards the EU’s long-
term objective of cutting emissions by at least 80% by 2050.
6. The INDC for the European Union states that policy on how to include land use, land-use change and forestry into
the 2030 greenhouse-gas mitigation framework will be established as soon as technical conditions allow and in any case
before 2020.
Transport
0 Industry
Buildings 10
-0.4 Power
-0.8
All GHG emissions:
Other energy
11
Other non-energy
-1.2
12
-1.6
-2.0
INDC target: 40% reduction by 2030
13
-2.4
2010 2015 2020 2025 2030 13
Notes: Emissions from land-use, land-use change and forestry (LULUCF) are excluded. Industry includes industrial CO2
process emissions. Exceptionally, transport includes emissions from international aviation. 13
Power sector 14
Electricity demand in the European Union increases by around 10% by 2030 in the
INDC Scenario. Growth is led by the residential and services sectors, while industrial demand 16
starts to decline in the 2020s. Renewables account for more than half of the European Union’s
power generation capacity in 2030 in the INDC Scenario (Figure 2.9). Coal-fired capacity 17
declines by nearly 40%, to stand at around 120 GW, while gas-fired capacity increases by
one-third, to reach 300 GW. The carbon intensity of the EU’s power sector halves by 2030.
18
Around one-quarter of total generation at that time is from variable renewables (wind and
-40
-80
2001- 2006- 2011- 2016- 2021- 2026-
2005 2010 2015 2020 2025 2030
End-use sectors
In the INDC Scenario, energy demand in end-use sectors declines slightly (6%) in the
European Union to 2030, while the related GHG emissions drop by around 20%. The
European Union has been a leading proponent of policies to increase efficiency and reduce
emissions in the transport sector, such as through increasingly strict fuel-economy standards
and policies to encourage modal shifts for passengers and freight. Alternative fuels, such as
biofuels and electricity, are projected to see significant growth (but from low levels), and
oil-based fuels remain dominant in the transport sector in 2030. Obstacles to the greater
use of alternative transport fuels include, but are not limited to, the high upfront costs of
electric vehicles and sustainability concerns affecting biofuels. In industry, it is not possible
to use energy carriers other than fossil fuels for all process heat applications and there is
(as yet) no viable alternative to oil-based petrochemical feedstock – a challenge facing all
regions. As other sectors reduce their emissions, overcoming these obstacles will become
increasingly important to sustaining rates of decarbonisation.
120
Domestic Commercial
80
9
2013
60 40 11
40
20 12
20
Notes: kWh/m2 = kilowatt hours per metre squared. GDP is expressed in purchasing power parity (PPP) terms.
13
Investment 13
In the INDC Scenario, EU investments in energy efficiency grow to reach similar levels to
those in energy supply by 2030. Energy supply investments remain relatively constant 14
at around $145 billion per year, focusing on renewables (and their integration) and
natural gas. Nearly $70 billion per year is invested in power generation, of which 70% is 16
in renewables – the largest recipient being wind (collectively, the EU is the world leader
in wind power investment to 2030), followed by solar PV. Relatively smooth trends for 17
renewables investment at the EU-level mask volatility at the country-level, where there
may be more notable peaks and troughs in activity. While the desired capacity can still be
18
delivered, such volatility may prejudice long-term industry development. The European
China
China’s rapid economic growth has brought huge benefits to the country and the world,
not the least of which has been the provision of electricity to around half a billion new
customers in the last few decades and a rapid increase in average incomes. But these
advances have also relied heavily on the consumption of coal, a choice driven by economic
and energy security factors but which has seen China’s GHG emissions escalate rapidly
as a consequence. China’s ongoing economic and social development will demand the
continued expansion of the energy sector, but policy and other drivers will encourage a
transition to a more efficient, low-carbon system.
While China has yet to formally submit its INDC, an important development in this regard
is its stated intention to achieve a peak in its CO2 emissions around 2030 (and to make
best efforts to peak earlier) and to increase the share of non-fossil fuels in primary energy
consumption to around 20% by 2030. These goals were declared as part of the US-China
Joint Announcement on Climate Change and Clean Energy Cooperation in November 2014,
the stated intention of which was to clarify intended respective post-2020 actions on
climate change. China already has a range of complementary energy and climate policies,
such as targets to reduce the carbon intensity of the economy (40% to 45% decline by
2020, relative to 2005), reduce reliance on coal in the economy (limit the share of coal
to less than 62% of total primary energy demand in 2020), introduce more stringent
fuel-economy standards in transport, reduce the CO2 intensity of industry by half by 2020
and to have a nationwide emissions trading scheme by 2020. While action has been taken
to implement some of these policies, others still require implementing action and the
effects may take some time to show up across the economy.
Given the pace at which China’s energy sector emissions have grown, achieving a peak
in emissions by 2030 will require a significant change in direction (Figure 2.11). In the
INDC Scenario, China’s energy-related emissions growth already show major signs of
deceleration by the early-2020s and is at a near-halt by the mid-2020s, before finally
reaching a plateau around 2030. Some of this change will result from restructuring the
Chinese economy away from rapid investment-led growth towards consumption-led
growth (at lower rates); but effective policy intervention across a range of sectors will also
be required if the steep emissions growth observed in recent decades is to be succeeded
by a similarly sharp slowdown in the years to come.
China
2013
10
8
2030
8
6 United States 9
4
India European Union
10
2
Africa Japan
11
0 10 000 20 000 30 000 40 000 50 000 60 000 70 000
GDP per capita ($2013, PPP)
12
25 1971
Energy-related CO2 per capita (t)
2013 13
20 2030
United States
15 13
10
Japan
13
China
5
India European Union
14
Africa
0 10 000 20 000 30 000 40 000 50 000 60 000 70 000 16
GDP per capita ($2013, PPP)
17
China is, and is projected to remain, the world’s largest consumer and producer of
coal through to 2030 in the INDC Scenario. The country’s energy-related emissions
are dominated by coal (more than 80% of the total) and this picture changes only
18
12 1.2 Gas
Gt
6 0.6
4 0.4
2 0.2
Power sector
In the INDC Scenario, China’s electricity demand is projected to increase by 75% by 2030,
and is twice the level of demand in the second-largest global electricity market (the United
States) at that time. The scale and age of China’s existing coal-fired power generation
capacity highlights the risk of high carbon lock-in to its energy supply infrastructure, a
potentially significant factor in determining the pace at which it retreats from its emissions
peak. Much of China’s coal-fired power capacity has been constructed since 2000, meaning
that it is technically capable of continuing to operate for decades to come. But it is also true
to say that China has taken steps to invest in developing and constructing highly efficient
coal-fired power plants and to retire some of its most inefficient existing coal-fired capacity.
In the INDC Scenario, around 95% of China’s existing coal capacity is projected to still be in
operation in 2030, and 345 GW of net new capacity is installed by that year (Figure 2.13).
Overall, China’s share of the world’s coal-fired power plant fleet increases to half by 2030,
and it accounts for 4.9 Gt of CO2 emissions, of which three-quarters is from existing plants.
g CO2/kWh
GW
emissions: Gt
1 000 New
4 800
Existing
800
10
3 600
Carbon
600 intensity: 11
CO2 emissions 2 400
400 per unit of
electricity
(right axis)
12
200 1 200
13
1990 2000 2010 2020 2030 2020 2025 2030
Notes: CO2 emissions per unit of electricity produced depend on the efficiency of existing and new power plants 13
operational in the system. Statistical differences on coal use for existing power plants, in some cases due to reported or
assumed calorific values, may lead to differences in the implied efficiency of the existing coal-fired power plant fleet.
13
End-use sectors
In the INDC Scenario, energy demand in China’s end-use sectors increases by less than 2%
14
per year, on average, to 2030, while the economy grows at nearly 6% per year. Industry
(a large coal consumer) sees emissions decline from around 2020, led by a gradual decline 16
7. The non-fossil fuel share is calculated according to the methodology of the Chinese National Bureau of Statistics. This
17
differs from the IEA’s calculation in so far as 1) statistical differences and the traditional use of biomass are excluded;
2) the calorific value for coal is lower; and, 3) the partial substitution method (coal equivalent method) is used to 18
calculate the primary energy equivalent for renewables, while the IEA uses the physical energy content method.
Investment
The growth of China’s energy sector is expected to slow in line with economic and population
trends, but total investment in energy supply is still projected to average $265 billion per
year from 2015 to 2030. Investment in power generation capacity accounts for around
$90 billion per year, with around 60% of this being for renewables capacity (mainly
wind, solar and hydro), 19% for coal and 18% for nuclear. Investment in transmission
and distribution accounts for around another $80 billion per year. Investment in end-use
energy efficiency increases rapidly across all sectors. In transport, efficiency investment
grows to more than double existing levels by 2030, driven by a huge increase in car sales,
the efficiency of which improves over time. In buildings, investment more than quadruples,
but from a low base, focusing on appliances and insulation.
India
There has been a huge expansion in the Indian energy sector in recent decades, as India
has sought to power a rapidly growing economy.8 The energy sector has brought electricity
to hundreds of millions of people who were previously without electricity supply, but the
task remains far from done, with about 300 million people still without access and many
more living with poor quality supply. In some ways, this situation reflects a more general
challenge to expand and improve India’s underlying infrastructure. Fossil fuels – particularly
coal – are playing a major role in powering India’s economic development, making India the
world’s fourth-largest source of energy-related CO2 emissions. India’s large (and growing)
population, its low (but increasing) levels of energy consumption per capita and the high
level of projected economic growth are powerful trends that, in the absence of concerted
action, will commit India to a high-carbon development path.
8. See a special focus on India’s energy outlook in the World Energy Outlook-2015 to be published on 10 November 2015.
Bioenergy
1 200 3.0
Hydro
1 000 2.5 Nuclear
13
Gas
800 2.0
Oil 14
600 1.5 Coal
400
Energy-related
CO2 emissions
16
1.0
(right axis)
200 0.5 17
2000 2013 2020 2025 2030
18
Coal
Oil
Gas
Nuclear
74% 58% 51% Hydro
Bioenergy
Wind
Solar PV
Other
However, as noted, even a rise of renewables sufficient to meet the stated target
would not spell the end of coal-fired capacity, which grows by 70% by 2030 in the
INDC Scenario. An important determinant of this projection is what happens
beyond India’s 2022 renewables target and, in the absence (at present) of a policy
commitment for renewables in the longer term, the INDC projections see continued
growth in demand for coal for electricity generation. The average efficiency of India’s
existing coal-fired capacity is relatively low due, among other things, to the use of
poor quality coal. The absence of control technologies in many existing power plants
leads to concerns about worsening air pollution (mainly sulphur dioxide, oxides of
nitrogen and particulate matter), with negative consequences for health and economic
development. Efforts to move to more efficient coal technologies are assumed in the
INDC Scenario and have a positive impact, but a significant share of Indian coal-fired
generating capacity in 2030 is still subcritical (Figure 2.16). A push towards higher
efficiency coal technologies could be supported by actions to improve the quality of
the coal used (such as coal washing).
1 000
India
3
China
Retirements Additions
800 Other OECD
OECD Europe
4
600
United States
400 5
200
6
2014 2030
7
End-use sectors
In the INDC Scenario, India’s rapidly growing economy and population drive end-use
8
energy demand one-third higher by 2022. Around three-quarters of the growth in final
energy consumption through to 2030 is met by fossil fuels, either directly or indirectly, 9
through higher electricity demand. Oil consumption in end-use sectors grows by 1.4 mb/d
by 2022 and then a further 1.6 mb/d to 2030. Net oil imports more than double by 2030 10
(to 6.2 mb/d) and the related import bill rises to around $270 billion. The projected growth
in vehicle ownership drives oil demand growth, with average incomes in India reaching a 11
level at which rapid increases are expected in car ownership. The implications of this for
oil demand would be even higher, were it not for the planned introduction of a national
fuel-economy standard of 4.8 litres per 100 kilometres (l/100 km) by 2021-2022. Due to the
12
relatively small size of cars in India, average fuel efficiency is relatively high when compared
with many other countries. 13
India’s industrial sector is the largest end-use energy sector, despite making up a relatively
small share of the overall economy. It is also relatively carbon intensive, primarily due to 13
heavy reliance on fossil fuels (mainly coal) and the significant share of energy-intensive
industries. Over time, grid-based electricity supply improves, allowing some industrial 13
users to move away from having their own back-up capacity and some others to switch to
using electricity for part or all of their energy needs. Overall, the carbon intensity of the 14
industrial sector drops by 30% by 2030 in the INDC Scenario, but remains relatively high.
India’s urban population grows by around 185 million through to 2030, putting pressure 16
on cities to modernise and expand their energy supply infrastructure. Across the country,
a strong continuing push is assumed to extend residential access to electricity and to 17
move households away from the traditional use of bioenergy as a cooking fuel. A corollary
benefit of both trends is that energy is used more efficiently, dampening the growth in
consumption (final energy consumption grows by 3.2% per year, on average, from 2013
18
Investment
In the INDC Scenario, investment in India’s energy supply infrastructure averages around
$85 billion per year to 2022 and increases to nearly $120 billion in 2030. Perhaps
unsurprisingly, the power sector accounts for around 70% of total energy supply investment
over the projection period and, in line with the expected focus on expanding renewables,
investment in solar and wind collectively more than doubles to reach $28 billion in 2022.
Overall, India’s future power sector investment moves towards a less carbon-intensive
path than in the past (with hydro, nuclear and natural gas also seeing increases over time)
but investment in coal does not cease and could grow if strong policy signals for low-carbon
energy supply were to fade after 2022. Investment in power transmission and distribution
infrastructure averages $28 billion a year to 2030 and is a high priority both to permit fuller
use of existing power generation capacity and to meet the needs of new plants coming on
stream. Investment in energy efficiency is more than two-and-a-half times current levels
by 2030. Two-thirds of efficiency-related investments are directed towards the transport
sector, particularly cars, where efficiency improves by around 25% to 2030.
Russia
Russia’s INDC proposes that it should limit its GHG emissions in 2030 to 70% to 75% of the
level in 1990 taking maximum possible account of the absorptive capacity of forests, which
play an important role in Russia’s overall emissions.9 The Russian INDC also cites legally
binding instruments that already exist to limit GHG emissions to no more than 75% of 1990
levels by 2020.
In the INDC Scenario, Russia’s energy-related CO2 emissions decline slightly from 2013
to 2030, with primary energy demand growing by only 0.1% per year, on average. Coal
demand reaches a peak around 2025 and demand for oil well before 2020. The carbon
intensity of Russia’s economy declines through to 2030, though it remains high relative to
that of many other countries (Figure 2.17), due to the continuing high share of fossil fuels
in the energy mix (led by natural gas), the inefficient use of energy in some sectors and
some non-energy factors, such as the climatic conditions. The efficiency of Russia’s thermal
electricity generation is projected to increase significantly to 2030 and the share of nuclear
in the electricity mix increases, both factors helping to suppress growth in power sector
emissions. Efficiency measures in end-use sectors help to limit the increase in final energy
consumption to 9% by 2030. Such measures include the phase-out of outdated production
processes and mandatory energy audits in energy-intensive industries, the tightening of
building codes, voluntary labelling programmes for electric appliances and incentives to
promote the purchase of hybrid and small cars.
9. LULUCF are currently estimated to absorb 540 Mt CO2 every year (UNFCCC, 2015).
China 1.2 5
($2013, PPP)
tCO2 per thousand dollars of GDP
1.0 6
0.8
Russia 7
0.6
United States
8
India 0.4
European Union
Japan
Mexico 0.2 9
Brazil
11
Mexico
Mexico has already established a comprehensive National Climate Change Strategy 12
encompassing both climate change mitigation and an assessment of its own vulnerability
to climate change. It has also adopted a General Law on Climate Change that established 13
institutions and instruments to reduce GHG and particle emissions, as well as to increase
the adaptive capacity of the country. In its INDC, Mexico puts forward an unconditional 25%
reduction in 2030 in its emissions of greenhouse gases and short-lived climate pollutants,
13
relative to a reference scenario.10 This translates into a GHG emission target of 759 Mt CO2-eq
in 2030, a level slightly lower than today. The energy sector accounts for the majority 13
of Mexico’s GHG emissions, with the next largest source being methane emissions from
waste disposal in landfills. While Mexico has stated that it aims to cut emissions from 14
deforestation to zero by 2030 and tackle its relatively large methane emissions through
improvements to the waste management infrastructure, the energy sector is central to
16
future mitigation efforts.
17
10. Mexico has also expressed a conditional target of a 40% reduction below the reference scenario if, among other
things, an international carbon price and carbon border adjustments are put in place. This conditional commitment has 18
not been incorporated in the INDC Scenario.
11. For countries and regions analysed in this section that have not either submitted an INDC by 14 May 2015 (all except
Gabon in Africa) or signalled the expected content of their INDC, the policy assumptions are consistent with those in the
WEO-2014 New Policies Scenario. See Chapter 1 and Annex A for more on the definition of the INDC Scenario.
Energy-related CO2 emissions in Southeast Asia increase by 60% from today’s level to reach 10
2 Gt in 2030, with Indonesia (the largest regional economy) accounting for around 35%
of the total. The emissions increase outpaces the growth for primary energy demand,
reflecting the greater share of fossil fuels in the energy mix (Figure 2.18). The largest
11
increase in emissions comes from the power sector as a result of the rapid growth in
demand for electricity and coal becoming the dominant fuel in the region’s electricity 12
mix. The growing importance of coal is largely due to Indonesia’s abundant and low-cost
coal supply, contrasting with relatively expensive natural gas in most countries. Continuing 13
industrialisation, particularly in the regions’ three largest economies (Indonesia, Thailand
and Malaysia) pushes industrial emissions up by more than 40% by 2030. An increase in 13
personal mobility and domestic trade, and weaker fuel-efficiency standards than in many
developed markets (or lack of standards), all help to push up emissions from personal and
freight transport by nearly 45% by 2030.12
13
14
16
17
18
12. A WEO Special Report on the energy outlook for Southeast Asia will be published in October 2015.
Energy demand has grown strongly in the Middle East in recent years, but often with important
distinctions between major energy exporters (such as Saudi Arabia, Qatar, Kuwait and others),
and smaller energy exporters or importers in the region. In the INDC Scenario, energy-related
CO2 emissions rise in the Middle East by around 35%, from 1.7 Gt in 2013 to 2.3 Gt in 2030.
Today, per-capita emissions are already 75% higher than the world average and they are
projected to reach 8.2 tonnes per capita in 2030, double the world average at that time.
in 2030
0.8 2013 3
0.6
4
0.4
0.2 5
6
Power
Power
Power
Transport
Other
Transport
Other
Transport
Other
Power
Industry
Industry
Industry
Transport
Other
Industry
7
Notes: Industry includes emissions from non-energy use, refineries and fossil-fuel supply. “Other” includes buildings and
agriculture. Electricity sector emissions in Latin America decline slightly from 2013 to 2030.
8
An important question for the emissions trajectory in the Middle East is whether policymakers
can get spiralling energy demand growth under control. Emissions growth is high in industry, 9
both due to low energy prices encouraging the growth of energy-intensive industries
(foremost the petrochemical industry) and wasteful use of energy because of the extent of 10
fossil-fuel subsidies. Although Saudi Arabia announced fuel-economy standards for imported
vehicles in 2014, average fuel consumption per vehicle in the Middle East is projected to 11
remain the highest in the world in 2025 (Figure 2.19). Energy demand growth in buildings
is less than in other sectors, as several countries in the region introduce thermal insulation
standards for new buildings and minimum energy performance standards for air conditioners
12
(by far the largest source of electricity consumption). Despite electricity demand increasing
by around 75% from 2013 to 2030, emissions increase by only around 15%, as the power 13
sector shifts from inefficient oil-fired power plants to gas-fired power plants and low-carbon
technologies. Some countries in the region have targets and policies in place to expand low- 13
carbon sources in the power sector (such as Saudi Arabia, Kuwait, and Dubai), but progress
has typically been limited so far. 13
In the INDC Scenario, methane emissions from upstream oil and gas activities in the Middle
East are projected to increase from around 235 Mt CO2-eq (around 25% of the global total) 14
to 295 Mt CO2-eq in 2030 (around 30% of the global total), linked to significant growth in
both oil production (nearly 34 mb/d in 2030) and gas production (765 billion cubic metres 16
in 2030). Efforts, such as those in southern Iraq and elsewhere, are underway to try and
capture and utilise associated gas in power generation, petrochemicals and industry.
17
Greenhouse-gas emissions in Latin America have historically been dominated by land
use, land-use change and forestry, and, not wholly unrelated to this, agriculture. Energy-
18
related CO2 emissions in Latin America are significantly lower than the global average, not
14
Litres per 100 km
Chile
12 Caspian
Australia/New Zealand
10
8
Other Latin America
6
United States
Other Europe
4
Middle East
Other Asia
European
Canada
Mexico
2
Russia
Union
Africa
Korea
Japan
China
India
Africa currently accounts for a small share of global GHG emissions: in 2013, the entire
continent accounted for just 3% of global energy-related CO2 emissions, with South Africa
accounting for more than one-third of the total.13 Yet Africa is expected to suffer severely
from the impacts of a changing climate. Gabon is the first African nation to submit its INDC,
pledging to keep 2025 emissions at least 50% below a business-as-usual (or “uncontrolled
development”) level, primarily through land management, but also by reducing flaring
13. See Africa Energy Outlook: World Energy Outlook Special Report 2014. Download a free copy at
www.worldenergyoutlook.org/africa.
In the INDC Scenario, electricity consumption in Africa doubles from 2013 to 2030, as
2
households purchase more electrical appliances as living standards increase. Around
500 million people are projected to gain access to electricity for the first time by 2030, 3
and the regions’ small industrial base expands significantly. Despite this, access to reliable,
affordable modern energy remains a major challenge in many parts of the continent, 4
stifling economic and social development. Africa starts to unlock its vast renewable energy
resources, with half of the growth in power generation capacity coming from renewables. 5
New hydropower capacity in the Democratic Republic of Congo, Ethiopia and Mozambique,
among others, plays a major role in bringing down the region’s average cost of power supply.
Other renewables, led by solar technologies, make a growing contribution to supply, while
6
geothermal is an important source of power in East Africa.
7
African energy-related CO2 emissions are projected to increase by around 40% to 2030, with
Nigeria, parts of North Africa, Angola, Mozambique and others contributing to this growth
(but often starting from very low levels). Emissions in South Africa are projected to follow
8
a “peak, plateau and decline” trajectory, as announced by the South African government
in 2009. Specifically, emissions peak in the period from 2020 to 2025, plateau for a several 9
years and then start to decline in the 2030s. Key drivers of this trend are improved energy
efficiency in end-use sectors and the power sector becoming less dependent on coal, as it 10
turns more towards renewables and nuclear.
11
12
13
13
13
14
16
17
18
Highlights
• The energy sector can achieve a peak in GHG emissions by around 2020, while
maintaining the same level of economic growth and development. The IEA proposes
a near-term strategy, building on available technology and five proven policy
measures, which are developed and illustrated in a “Bridge Scenario”. Adoption of
these measures can lock-in the recently observed decoupling of emissions growth
from economic growth, an important first step to move the energy world towards
a path consistent with the achievement (through the adoption of further measures
later) of the long-term commitment to a maximum temperature rise of 2 °C. A near-
term peak in global emissions will send a powerful signal of the determination of
governments to transform their energy economies.
• The proposed policy measures are:
Increasing energy efficiency in the industry, buildings and transport sectors.
Progressively reducing the use of the least-efficient coal-fired power plants and
banning their construction.
Increasing investment in renewable energies to $400 billion in 2030.
• The Bridge Scenario puts a brake on growth in oil and coal use within the next five
years: oil demand rises to 95 mb/d by around 2020 and then plateaus, while coal
demand peaks before 2020. The shift towards renewables increases their share in
power generation to 37% in 2030, 6 percentage points above that in the INDC Scenario.
• China cuts energy-related GHG emissions by 1.3 Gt CO2-eq in 2030, relative to
the INDC Scenario, mainly through improved energy efficiency. The abatement in
India (400 Mt CO2-eq) and the European Union (210 Mt) is mostly driven by energy
efficiency as well, while in the United States (360 Mt), renewables contribute about
one-third of the savings. In the Middle East (550 Mt) and Africa (260 Mt), reducing
methane releases and fossil-fuel subsidies reform are central to emissions savings.
In Southeast Asia, all five measures contribute to total savings of 300 Mt CO2-eq.
• At $26 trillion, energy supply investments in the Bridge Scenario up to 2030 are
$1.6 trillion lower than in the INDC Scenario. Higher renewables investments
are more than offset by lower investment in fossil fuels. Average annual energy
efficiency investment rises to $650 billion, almost one-third over the INDC Scenario,
but household expenditure on energy generally falls. Globally, 1.7 billion people
gain access to electricity for the first time by 2030 and 1.6 billion people gain access
to their first clean cookstoves.
More can be done. But can it be reconciled with other government priorities, such as
economic growth and energy security and affordability? And in what timescale?
This chapter, the “Bridge Scenario”, suggests how the results of the INDC Scenario could
be enhanced by a series of immediately practicable steps. Taking as an absolute constraint
that the package of additional measures must not prejudice the levels of development
and economic growth underlying the INDC Scenario, the Bridge Scenario sets out a series
of steps which could be taken in the short term and what they could achieve. It is not a
judgement on the limits of what it is politically possible to achieve, nor does it attempt to
plot a path to the ultimate climate goal (see Chapter 4). But it suggests a practicable course
of short-term action, drawing only on known technologies and policy measures which are
tried and tested, which can lift the path of international achievement significantly higher
towards the ultimate objective.
One highly significant feature of the results achieved in the Bridge Scenario is that the level
of total global energy-related greenhouse-gas (GHG) emissions ceases to rise after 2020.1
Such a peak is an essential feature of a successful path to a long-term temperature rise
not exceeding an average of 2 degrees Celsius (°C). Commitment to such a peak, emerging
from COP21, would send a profound signal to the energy and finance communities that
governments are collectively determined that the energy sector shall change to the extent
necessary to deliver the internationally agreed climate goals. Conveying that message wins
half the battle. For countries which have already submitted their INDCs, the Bridge Scenario
identifies productive opportunities to overachieve them. For countries which have not
yet brought forward their INDCs, the scenario offers a selection of policies which would
enhance current intentions.
1. To allow comparison with INDCs by different countries, results in this chapter are presented for 2030, given that the
focus of INDCs is the timeframe between 2025 and 2030.
The measures in the Bridge Scenario are essential elements in an energy sector transition 8
compatible with the 2 °C goal. In order to ensure that key technologies, such as carbon
capture and storage (CCS) or electric vehicles are commercially available at the required 9
scale by the early 2020s, a further push on research, development and deployment (RD&D)
for key technologies will be essential. How this effort ties in with the long-term transition
to 2 °C is the subject of Chapter 4.
10
13
Limit least-efficient coal power
13
energy technologies
Commercialise key
13
14
16
2. The analytical framework is the World Energy Model comprising of 25 regions. Within these regions, 12 countries
are considered individually. The ENV-Linkages model has the same regional coverage. For further details, see
17
www.worldenergyoutlook.org/weomodel/ and (Chateau, Dellink and Lanzi, 2014).
3. The Ministerial statement is available at: www.iea.org/newsroomandevents/ieaministerialmeeting2013/ 18
ministerialclimatestatement.pdf.
The Bridge Scenario builds on previous analysis conducted for Redrawing the Energy-
Climate Map: World Energy Outlook Special Report (IEA, 2013a), which proposed four
measures that each country can do individually to stop global emissions growth by
2020.4 These measures have been promoted by many governments since the launch
of the report in June 2013. Some recent progress includes:
Energy efficiency: The United States has announced standards for electric motors, walk-
in coolers and freezers, strengthened Energy Star appliance standards for residential
refrigerators and freezers, and announced the extension of heavy-duty vehicle
standards beyond 2018. Vehicle fuel-economy standards for passenger vehicles have
been introduced in India, Mexico and Saudi Arabia, while the European Union and
China have extended minimum energy performance standards for certain categories
of appliances. Countries from Southeast Asia launched the ASEAN-SHINE programme
in late-2013 to harmonise efficiency standards for air-conditioners. On a broader level,
the G20 released an Energy Efficiency Action Plan at the end of 2014 to strengthen
voluntary energy efficiency collaboration.
Reducing inefficient coal use in power generation: In 2014, China published the Action
Plan for Transformation and Upgrading of Coal Power Energy Conservation and Emission
Reduction (2014-2020). It establishes the target of phasing out 10 gigawatts (GW) of
small thermal power plants by 2020. The United States put forth the Clean Power Plan
in June 2014 (to be finalised in 2015), with the objective of cutting carbon dioxide (CO2)
emissions from power plants. In May 2015, the European Union agreed on a plan to
introduce a Market Stability Reserve in 2019 that could withdraw allowances in times
of surplus and thus strengthen the carbon price signal.
4. The report was aimed at providing input into the work-stream 2 of the UNFCCC Ad Hoc Working Group on the Durban
Platform for Enhanced Action (ADP).
The power sector is central to climate abatement in the energy sector. Although already 13
the focus of much policy attention, previous analysis in the World Energy Outlook (WEO)
showed that the sector has the potential to reduce emissions by a further 25% by 2040, 13
yielding half the saving in overall CO2 emissions required to achieve the 2 °C target (IEA,
2014a). The Bridge Scenario proposes two main measures for the power sector: first, a
14
gradual reduction in the use of the least-efficient coal-fired power plants and a ban on the
construction of new ones. Coal is the backbone of power generation in many countries and
has been responsible for more than 40% of global energy-related CO2 emissions growth since 16
2000. Half of total CO2 emissions from the power sector today (6 gigatonnes [Gt]) come from
inefficient (typically subcritical) coal power plants. We do not project a complete phase out 17
of coal in the near term, in order to safeguard the reliability of future electricity supply, thus
18
5. For a discussion of such supporting measures, see IEA, 2012.
The second means of reducing GHG emissions in the power sector adopted in the Bridge
Scenario is an increase in renewable energy investment to $400 billion by 2030. We
estimate that, in 2014, about $270 billion was invested in renewable energy development
in the power sector, often supported by various forms of intervention around the world.6
As a result, renewables – especially wind and solar photovoltaic (PV) – are becoming
increasingly competitive in the marketplace. For solar PV, average investment costs –
a longstanding obstacle to further commercialisation – fell by a factor of more than
four over the past few years in China, and by a factor of two on average in the OECD
(IEA, 2014b). Further market uptake beyond the levels achieved in the INDC Scenario will
require complementary regulatory attention designed to ensure system reliability, but not
necessarily a need for publicly financing renewables investment. Rather, there is a need
to create the conditions which will redirect investment in energy supply to maximise
investment in low-carbon technologies, such as renewables, by providing the appropriate
signals to all stakeholders involved.
Phasing out subsidies to fossil fuels reduces wasteful energy use by sending more accurate
price signals, while also improving the case for investing in energy efficiency and competing
non-fossil energy supply technologies. Subsidies that support the consumption of fossil
fuels are typically intended to make energy more accessible for the poor, but they are
often an inefficient means of doing so and other forms of support would cost much less.
The IEA estimates that only 8% of the money spent on fossil-fuel consumption subsidies
reaches the poorest 20% of the population (IEA, 2011). In the Bridge Scenario, we assume a
complete phase-out of fossil-fuel consumption subsidies by 2030, except in a few countries
in the Middle East, where reforms progress at a slightly slower pace. No assumptions are
made about reforms to fossil-fuel production subsidies (e.g. trade instruments, tax breaks,
risk transfers, etc.) largely due to the complexity and uncertainty associated with their
relationship on energy demand and supply trends. Even though the vast bulk of the savings
in energy use and associated GHG emissions from subsidy reform would arise from the
removal of consumption subsidies, systematic review of the efficiency and effectiveness of
fossil-fuel production subsidies could produce dividends.
In the Bridge Scenario, we also assume that policies are adopted to reduce releases of
methane to the atmosphere in upstream oil and gas production. Methane is a powerful
greenhouse gas that has a stronger effect than CO2 in trapping solar radiation in the
atmosphere (although it also has a much shorter lifetime in the atmosphere).7 Reducing
6. Investment made over the construction period is allocated to the year a completed project begins operation, which
may result in differences from other published estimates.
7. The various ways to compare the effects of methane versus CO2 on global warming are discussed in the section on
minimising methane releases that follows. The data for CO2 equivalency provided are on the basis of methane’s global
warming potential over 100 years.
38
Gt CO2-eq
INDC Scenario
37 15% Upstream methane reductions
9% Reducing inefficient coal
36 17% Renewables investment
10% Fossil-fuel subsidy reform
35
32
2014 2020 2025 2030
The largest contribution to global GHG abatement comes from energy efficiency, which
is responsible for 49% of the savings in 2030 (including direct savings from reduced
fossil-fuel demand and indirect savings as a result of lower electricity demand thereby
reducing emissions from the power generation).9 The power sector is the second-largest
contributor to global GHG savings, at 26% in 2030. While limitations on the use of the
least-efficient coal power plants are effective in curbing global GHG emissions until 2020
8. Tables containing detailed projection results for the Bridge Scenario by region, fuel and sector are available in Annex B.
9. The results take into account direct rebound effects as modelled in the IEA’s World Energy Model. Direct rebound
effects are those in which energy efficiency increases the energy service gained from each unit of final energy, reducing
the price of the service and eventually leading to higher consumption. Policies to increase end-user prices are one way
to reduce such rebound effects, but are not considered in the Bridge Scenario (except for fossil-fuel subsidy reform). The
level of the rebound effect is very controversial; a review of 500 studies suggests though that direct rebound effects are
likely to be over 10% and could be considerably higher (IPCC, 2014).
5
Figure 3.3 ⊳ Energy-related CO2 emission levels and GDP by selected region
in the Bridge Scenario
6
10 1990
Gt
China 2014
2030
7
8
6
8
4
United States
9
India
European Union
2
Southeast Asia 10
Africa
0 10 20 30 40 50 11
Trillion dollars ($2013, PPP)
China 1 346 Mt
India 395 Mt
Russia 280 Mt
Africa 260 Mt
Notes: The relative shares of emissions savings by policy measure have been calculated using a Logarithmic Mean Divisia
Index I (LMDI I) decomposition technique. In regions where fossil-fuel subsidies hinder energy efficiency investments
today, the existing subsidy level in each sector was used to quantify the impact of fossil-fuel subsidy reform on emissions
savings.
Although the strong growth in energy demand in China over the past decade has locked-
in a relatively carbon-intensive energy infrastructure, an earlier peak in CO2 emissions
(including process emissions) can be achieved than in the INDC Scenario: in the Bridge
Scenario, it is achieved in the early 2020s, as China’s carbon intensity (i.e. the amount of
CO2 emitted per unit of gross domestic product [GDP]) drops by 5.4% per year between
2013 and 2030, compared with 4.7% in the INDC Scenario. The share of non-fossil fuels
in primary energy demand rises to 23%10 by 2030, three percentage points above the
target in the INDC Scenario. In India, planned energy sector policies have a focus on
large-scale solar PV deployment. Making more use of the energy efficiency potential
across all sectors could help to cost-effectively reach India’s energy sector targets and
support a total reduction of GHG emissions by 400 Mt CO2-eq (or 11%) in 2030, relative
to the INDC Scenario.
As in the case of China and India, most other countries had not submitted their INDCs for
COP21 by 14 May 2015, but their existing and planned policies give a good indication of the
likely level of ambition of their targets. In Japan, for example, the existing and announced
10. Value is calculated using the coal-equivalent approach in Chinese statistics, which is likely to be the basis of the
Chinese INDC. Using IEA definitions, the share of non-fossil fuels is 20% in 2030 in the Bridge Scenario.
Energy efficiency 11
The adoption of energy efficiency measures offers a wide range of benefits, well beyond
12
their contribution to climate policies. These benefits include increases in disposable income
and improved industrial productivity (with positive effects for economic growth), improved
local air quality (with associated health benefits) and poverty alleviation (IEA, 2014c). All 13
of the measures adopted in the Bridge Scenario have already proven to reduce average
energy use for the same energy service. They can all be adopted immediately and do not 13
involve overcoming obstinate deployment hurdles (such as those associated with split
incentives as a result of ownership, i.e. the landlord/tenant issue, or demand substantial 13
effort in terms of consumer education). The proposed energy efficiency measures in the
Bridge Scenario include:
14
Industry sector: minimum energy performance standards (MEPS) are introduced
for electric motor systems (including for the electric motors, gears, transmission 16
systems and motor-driven equipment) and the adoption of variable speed drives is
made mandatory (where applicable). Incentives are introduced for heat pumps that 17
provide low-temperature heat, and mandatory audit programmes raise awareness,
particularly in industries where the largest potential remains, including food, textile,
18
paper and chemicals.
In the Bridge Scenario, energy efficiency is the largest contributor to additional GHG
emissions savings, with savings of around 2.3 Gt CO2-eq relative to the INDC Scenario
in 2030, or 49% of the total. Early adoption of energy efficiency policies is important,
because savings increase over time as they take effect and the proportion of more efficient
technologies in the stock rises, in particular in road vehicles and electric motors in industry,
where the average lifetime is typically in the range of 10 to 15 years.
Mt CO2-eq
-250 -200 -150 -100 -50 Regions:
India
European Union
United States
Latin America
Southeast Asia
Africa
Russia
Middle East
Heating and cooling Appliances and lighting Industrial motors Road transport
2013 IE3 (from 2016) IE3 or IE2 +VSD* IE2 IE2 n/a n/a n/a 11
2030 IE4+VSD IE4+VSD IE4+VSD IE4+VSD IE4+VSD IE4+VSD IE4+VSD
12
Notes: IE1, IE2, IE3 and IE4 represent the efficiency levels standard, high, premium and super premium, respectively, as
defined by the International Electrotechnical Commission. For a motor with an output of 10 kilowatts, IE1 represents
an efficiency of 87%, IE2: 89%, IE3: 91% and IE4: 93%. * VSD = variable speed drive, i.e. equipment used to control the 13
speed of machinery. Where process conditions require adjustment of flow from a pump or fan, VSD may save energy.
13
India saves 230 Mt CO2-eq by increasing energy efficiency in the Bridge Scenario, relative
to the INDC Scenario. As in China, the industry sector is the largest electricity-consuming
13
sector in the economy today (more than 40%). MEPS for electric motors already exist in
India, but further increasing the efficiency of electric motor systems drives a reduction
of electricity demand by 12% (or around 100 terawatt-hours [TWh]) in 2030 and saves 14
95 Mt CO2-eq of GHG emissions, relative to the INDC Scenario. Energy demand is expected
to rise considerably in India’s buildings sector, as a large part of the population at present 16
lacks access to modern energy services. Only 4 out of 13 available labels for appliances
are mandatory in India today, so MEPS to increase energy efficiency in buildings help 17
reduce emissions growth (saving 85 Mt CO2-eq of GHG emissions by 2030) while also
improving the effectiveness of strategies to improve energy access. The road transport
18
sector contributes emissions savings of more than 50 Mt CO2-eq in 2030 relative to the
The United States has adopted a raft of energy efficiency policies over the past few years
but, given today’s level of energy consumption per capita, further improvements are
possible without significant changes to current lifestyles. The pursuit of energy efficiency
measures in the Bridge Scenario achieves additional savings of 120 Mt CO2-eq in 2030,
relative to the INDC Scenario. The principal contribution to the savings comes from the
buildings sector, where emissions are reduced by an additional 90 Mt CO2-eq in 2030. The
transport sector saves another 45 Mt CO2-eq of GHG emissions in 2030, mainly through
further improving and extending to 2030 the fuel efficiency standard for trucks.
Notes: Cleaning equipment refers to washing machines, dryers and dishwashers. For appliances, the average
consumption in 2030 can be higher than today if the size of the equipment rises with higher income per capita. For labels,
values in parentheses represent the level of the least-demanding label in 2030. In the United States, labels have no
range. The voluntary label “Energy Star” represents an increase of efficiency of 10% to 30%, relative to the current level
of energy efficiency standards, and is considered as mandatory by 2030 in the Bridge Scenario. For passenger vehicles,
the values represent test cycle fuel consumption of new sales; for heavy trucks (above 16 tonnes), they are estimated
on-road fuel consumption of new vehicles.
Potential GHG emissions savings in other countries are necessarily smaller in absolute terms 7
than those from the above regions, given their relative size, even though the degree of ambition
of existing and planned policies (as considered in the INDC Scenario) is generally lower. But, on 8
aggregate, savings in the Bridge Scenario from other countries do make a significant difference.
For example, recent WEO analysis shows that around three-quarters of the economic efficiency 9
potential of Southeast Asia remains untapped until 2035 under existing and planned policies
(IEA, 2013b). The adoption of more stringent energy efficiency requirements in the region
could save 90 Mt CO2-eq emissions by 2030 (of which almost 40% is in Indonesia), relative to
10
the INDC Scenario. The co‑benefits for energy security are significant (Figure 3.6): oil demand
is down by 0.2 mb/d in 2030 relative to the INDC Scenario and electricity demand growth is 11
moderated to 3.5% per year, compared with 4.1% in the INDC Scenario.
12
Figure 3.6 ⊳ Fossil-fuel savings from energy efficiency and fossil-fuel subsidy
reform in the Bridge Scenario relative to the INDC Scenario, 2030 13
Oil: mb/d Gas: bcm Coal: Mtce
-1.6 -1.2 -0.8 -0.4 -80 -60 -40 -20 -200 -150 -100 -50 13
United States
European Union
13
China
India
Southeast Asia
14
Africa
Middle East 16
Latin America
Rest of world 17
Savings from fossil-fuel subsidies Savings from energy efficiency
Notes: mb/d = million barrels per day; bcm = billion cubic metres; Mtce = million tonnes of coal equivalent.
18
TWh
-1 500 -1 200 -900 -600 -300
China
World other*
TWh
-200 -160 -120 -80 -40 Regions:
India
Middle East
United States
European Union
Southeast Asia
Africa
Latin America
-20% -16% -12% -8% -4%
Heating and cooling Appliances and lighting Industry Change in electricity demand
(bottom axis)
* World other represents all countries except for China. Note: TWh = terawatt-hour.
As in India, the case for improving energy efficiency in Africa is closely linked to providing
energy access to those currently without supply: today, more than 620 million people lack
access to electricity, and nearly 730 million rely on the traditional use of biomass for cooking
purposes. The potential to improve energy efficiency on the continent is vast; at the basic
needs level, biomass cookstoves often have very low conversion rates (10% to 15%), and
improving their efficiency can reduce indoor air pollution and certain GHG emissions. In
Power sector: reducing inefficient coal use and additional investment in renewables 5
Two-thirds of global power generation today comes from fossil fuels, making the sector
responsible for more than 40% of global energy sector-related CO2 emissions. This scale 6
of emissions, combined with the availability of low-carbon alternatives, makes the power
sector central to any mitigation strategy. The required transformation can materialise only 7
if the right signals to investors are in place. An analysis of power sector investments over
the past decade, undertaken for the IEA’s World Energy Investment Outlook (IEA, 2014d), 8
shows that a transition has begun, around 60% of total power plant investments since 2000
have been made in low-carbon technologies, in particular hydro, wind and solar PV. But
the process needs to go much further: every year that passes locks in further fossil-fuel
9
generation and consequent emissions growth from the power sector.
10
Energy efficiency policies curb electricity demand while safeguarding essential supply;
their adoption is a key enabler to power sector decarbonisation. In the Bridge Scenario,
the other two pillars are: 11
Progressively reducing the use of the least-efficient coal-fired power generating plants
12
and banning the construction of new ones.
A further increase in investment in renewable energy technologies from $270 billion
13
in 2014 to $400 billion in 2030.
In some cases, these policies will need to be complemented by other power sector reforms 13
to facilitate the transition and maintain system reliability (the considerations differ by
country). This mainly involves ensuring adequate capacity in the system and strengthening 13
and expanding grid interconnections to enable full use of the flexibility of the power plant
fleet. At very high levels of renewables penetration, necessary additional measures might
extent to energy storage, use of smart grid technologies and demand response measures
14
(Chapter 4); but in the Bridge Scenario, the integration challenge is not exacerbated in
any region, compared with the INDC Scenario. In regions where access to electricity is 16
inadequate today, as in India or Africa, the Bridge Scenario reaches the same level of
electricity access in 2030 as in the INDC Scenario. 17
18
The policy framework in the Bridge Scenario includes a reduction in the use of the
least-efficient coal-fired power plants. But the adoption of this policy does not mean
that investment even in efficient coal power plants is without risk. Any strategy to
realise the long-term 2 °C target will require a level of decarbonisation of the energy
sector that cannot be achieved even with the most efficient coal power plants, as they
are constituted today. In the very long term, gas-fired power generation will also be
incompatible unless measures are taken to abate their CO2 emissions. Investors in new
fossil-fuel power plants, especially coal-fired power plants, need to ensure not only
the high efficiency of the plants, but also that they are, where possible, suitable for
later modification to incorporate carbon capture and storage (CCS), i.e. that they are
“CCS-ready” to ensure that the capital invested in these assets is not wiped out as climate
targets are strengthened. Action can be taken at the time of design and construction to
improve the technical and economic feasibility of retrofitting CCS, notably:
Ensuring sufficient space available on-site for the installation of additional CO2
capture equipment.
Locating the plant in reasonable proximity to an existing possible CO2 storage site,
or one that is likely to become available by the time of retrofit.
Verifying that local water will continue to be available in sufficient quantities for
the needs of the plant, as CCS increases water requirements.
The gradual reduction in the use of the least-efficient coal-fired power plants has three
key stages:13 first, a ban on the construction of new inefficient coal-fired power plants
(typically conventional subcritical power plants)14; second, a gradual reduction in the level
of operation of the least-efficient plants that are currently under construction (i.e. 83 GW
of capacity, but ensuring that they can still recover the investment costs); and, third, the
retirement or idling of all ageing inefficient coal-fired power plants that have already repaid
their investment costs, to the full extent possible without affecting power system reliability.
Relevant measures are already in use in many countries. They include CO2 pricing (such as
through an emissions trading scheme, as in the European Union and in selected pilot regions
in China, or carbon taxes, as in the Nordic countries); the imposition of power production
limits for each generator; the allocation of generation quotas favouring operation of low-
emission plants; renewing (or failing to renew) operational licenses or altering the dispatch
schedule in favour of more efficient plants; and the adoption of standards on the energy
efficiency of coal power plants, on their average level of CO2 emissions per kilowatt-hour
(kWh) or on the average level of air pollution.
9
Figure 3.8 ⊳ Global energy-related CO2 emissions savings from the power
sector in the Bridge Scenario relative to the INDC Scenario
10
Savings by fuel Policy drivers
2015 2020 2025 2030 2015 2020 2025 2030
Coal
11
Gas
-0.5 Oil 12
Improved coal
-1.0 efficiency
-1.5
Renewables
Reduced
13
electricity
demand
-2.0
13
-2.5
13
Gt
-3.0
Note: Besides reducing CO2 emissions from power generation, the suggested policies indirectly reduce methane
14
emissions from coal mining, contributing 1.0 Gt CO2-eq to cumulative savings from the reduced use of coal.
16
17
15. Variable renewables are renewable energy technologies with output that depends on variable renewable energy 18
inputs, such as solar irradiation and wind, and which do not incorporate energy storage technologies.
1 400 Other
GW
Africa
1 200
Developing Asia
1 000 European Union
Other required additions
United States
Under construction
Retirements
800
600
Idled plants
400
200
In the Bridge Scenario, the increase in renewables investment is particularly effective after 2020.
While total capacity of renewable energy technologies in the Bridge Scenario is only marginally
higher than in the INDC Scenario in 2020, it is 285 GW, or 8%, higher in 2030, reaching around
4 000 GW (Figure 3.10). In 2030, around 70% of total capacity additions in the power sector are
from renewable energies in the Bridge Scenario, 14 percentage points above the level achieved
in the INDC Scenario in 2030, and up from around 45% in 2014. The increase in investment in
renewable energy technologies in the power sector in the Bridge Scenario varies by region,
depending on the prevailing power mix, the level of climate ambition in the INDC Scenario and
the regional cost of renewables deployment. In some regions, investment in certain renewable
energy technologies is lower than today, even if capacity additions are higher, as technology
costs gradually decline. But the renewables investment of around $400 billion in 2030 in the
Bridge Scenario is an increase of $110 billion (or almost 40%) over that in the INDC Scenario.
The strongest increases occur in China ($27 billion more than in the INDC Scenario), the United
States ($15 billion), Southeast Asia ($13 billion) and India ($12 billion).
40%
Nuclear
5
Oil
Gas 23%
6% 1%
20%
Coal 14% 6
2014 2030
7
The power sector policies of the Bridge Scenario achieve remarkable reductions in average
8
emissions from the power sector in all countries and regions (Figure 3.11). Today, the
power sector emits around 530 grammes of carbon dioxide per kilowatt-hour (g CO2/kWh)
on a global level. This is reduced to 430 g CO2/kWh in the Bridge Scenario in 2020 and 9
around 300 g CO2/kWh in 2030.
10
Figure 3.11 ⊳ Average CO2 emissions per kWh by selected region in the 11
Bridge Scenario
800 2013
12
g CO2/kWh
2030
600
13
400
13
13
200
14
United European China India Southeast Latin Africa Middle
States Union Asia America East 16
In many countries, the measures adopted in the Bridge Scenario simply increase the 17
effectiveness of policies that are already in place today (as in the European Union),
under development, or further extend their application to 2030. In the United States, for
18
example, the Clean Power Plan significantly constrains the use of coal-fired power plants
The challenge for India is different to that which is facing many other countries. India’s power
sector relies on fossil fuels, mostly coal, for more than 80% of electricity generation, and a
significant part of the population has no access to electricity today. In the Bridge Scenario,
an additional 400 million people obtain access to electricity by 2030. Chronic issues persist
over high transmission and distribution losses and problems with financing power sector
investment in an environment in which revenues from power generation are insufficient
to provide an adequate return on investment (IEA, 2014d). In the Bridge Scenario, solar
PV provides most of the variable renewables capacity in 2030, at 135 GW, followed by
110 GW of wind power, extending stated power sector targets (Chapter 2). Compared to
the INDC Scenario, the capacity of the least-efficient coal power plants operating in 2030
is reduced by almost 160 GW, due to lower electricity demand. Increased use of flexible
capacity, such as hydropower, helps to accommodate variable renewables generation.
The two power sector policies proposed in the Bridge Scenario are particularly effective
in regions with high shares of coal in power generation. Southeast Asia, for example, has
cumulative coal-fired capacity additions of around 80 GW by 2030 in the INDC Scenario.
In the Bridge Scenario, the average amount of subcritical coal installed per year is reduced
by 1.5 GW relative to the INDC Scenario, while the share of renewables in total electricity
generation increases 8 percentage points, to 26%, by 2030. As a result, the power sector in
Southeast Asia saves 230 Mt CO2-eq of GHG emissions by 2030, relative to the INDC Scenario.
In the Middle East, where oil is frequently used for power generation, partly as a result of
the phase-out of fossil-fuel subsidies, renewable generating capacity additions rise to 8 GW
per year in 2030 (40% over what is achieved in the INDC Scenario), reducing emissions from
the power sector by 140 Mt CO2-eq in 2030, relative to the INDC Scenario. In Africa and
Latin America, average annual installations of renewables for power generation to 2030
reach 7 GW (about 15% above what is achieved in the INDC Scenario) and 8 GW (around
10%), respectively. Achievement beyond this is limited by the already ambitious plans
considered in the INDC Scenario.
18
16. These estimates do not take into account oil lamps used in small businesses.
25 Maximum
Mt CO2-eq per Mtoe
emission factor
20 Minimum
emission factor
15
10
Eurasia
500 100 Americas
Africa 3
400 80 Asia
Middle East
300 60 IEA average crude 4
oil import price
(right axis)
200 40 5
100 20
6
2007 2008 2009 2010 2011 2012 2013 2014*
7
*Estimate using preliminary data for 2014.
Momentum for reform of subsidy programmes has been building for several years now,
8
with good prospects that this will continue (Table 3.3). Recognition of the case for reform
can, in large part, be attributed to the extended period of persistently high energy 9
prices until mid-2014, which pushed the cost of subsidies to crippling levels in some
countries, particularly those with fast-growing energy demand. It can also be attributed 10
to the initiatives of groups such as the G20, Asia-Pacific Economic Cooperation (APEC),
the Friends of Fossil Fuel Subsidy Reform (a group of non-G20 countries that support
11
the reform of inefficient fossil-fuel subsidies) and the Global Subsidies Initiative. Some
loans by international lending agencies and the International Monetary Fund for energy
projects now have conditions attached relating to subsidy reform. Moves have been made 12
in developing countries to reduce consumption subsidies and in developed countries to
reduce producer subsidies for investment in fossil-fuel extraction. 13
Somewhat paradoxically, given what is said above about the motivational force of high oil
prices, the plunge in oil prices since mid-2014 could add further momentum to the phase- 13
out of consumer subsidies, by making withdrawal of subsidies less politically controversial.
Indeed several countries, including India, Indonesia and Malaysia, have already seized the 13
opportunity. On one hand, by reducing the cost of subsidising energy consumption, lower
international prices may be said to reduce the budgetary urgency for governments to take 14
action. But they also present a unique opportunity to abolish subsidies – or increase energy
taxes – without having a major upward impact on prices – or inflation – and provoking public
outcry. However, the durability of such reforms will be tested if and when international
16
prices again move higher. Observance of a few guidelines can increase the likelihood of
long-term success (Box 3.4). 17
18
Main fuels
Country Recent developments
subsidised
China LPG, natural gas, In February 2015, the National Development and Reform Commission
electricity announced plans to group existing and new industrial gas consumers
under a single pricing mechanism.
India Kerosene, LPG, Stopped subsidising diesel in October 2014, following similar reforms to
natural gas, gasoline in 2010. In January 2015, a cash transfer scheme was introduced
electricity for residential LPG consumers with the key objective of stopping the
diversion of subsidised cylinders to commercial use.
Indonesia Diesel, electricity At the end of 2014, subsidies to gasoline (88 RON) abolished and the
diesel subsidy capped at IDR 1 000 ($0.08) per litre.
Iran Gasoline, diesel, The parliament approved a 5% increase in gasoline prices for fiscal year
kerosene, LPG, 2015-2016. The revised price of regular gasoline will be IRR 7 350 ($0.27)
natural gas, per litre.
electricity
Kuwait Gasoline, diesel, In January 2015, prices of diesel increased from KWD 0.055 to 0.170 ($0.59)
kerosene, LPG, per litre. At the end of January 2015, prices of diesel and kerosene
natural gas, were cut back to KWD 0.110 following political pressure. Plans to remove
electricity subsidies on gasoline and electricity have been postponed.
Malaysia LPG, natural gas, In December 2014, subsidies for gasoline (RON95) and diesel were
electricity abolished, with prices for both now set monthly to track international
levels. In January 2014, electricity tariffs were increased by 15% on
average to MYR 0.38 ($0.12) per kWh. Fuel cost pass-through, based on
international gas price movements, was resumed in the same month.
In May 2014, natural gas prices were increased by up to 26% for certain
users.
Morocco LPG Ended gasoline and fuel oil subsidies at the beginning of 2014 and diesel
subsidies in January 2015.
Oman Gasoline, natural In May 2014, plans were announced to gradually reduce fuel subsidies,
gas especially for gasoline. In January 2015, gas prices for industrial
consumers were raised by 100% to OMR 0.041 per cubic metre ($3.01 per
million British thermal units). A 3% annual rise is to be introduced for
industries.
Thailand LPG, natural gas, In October 2014, the price of compressed natural gas for vehicles was
electricity increased by THB 1 ($0.03) per kilogramme. In December 2014, subsidies
for LPG were ended.
7
Figure 3.14 ⊳ Global GHG emissions savings from fossil-fuel subsidy reform in
the Bridge Scenario relative to the INDC Scenario 8
2014 2020 2025 2030
9
-0.1 10
Middle East (54%)
-0.2 11
Eastern Europe/
-0.3 Eurasia (13%) 12
Africa (13%)
Gt CO2-eq
National circumstances and changing market conditions mean that there is no single
path to follow when reforming fossil-fuel subsidies. However, past experience has
shown that the prospects for success can be enhanced by adherence to some simple
guidelines (Figure 3.15):
Get the prices right – One of the basic pillars of successful subsidy reform is
to ensure that prices reflect the full economic cost of the energy that is being
supplied. Prices before tax should be set with reference to international market
prices and be adjusted as necessary to reflect inflation and currency volatility. This
process is more complicated with electricity than, say, oil products: it is necessary
to ensure that tariffs are sufficient to cover not only the costs of the fuel inputs but
also of transmission and distribution, while also giving utilities a return on their
capital. Public authorities need to ensure that pricing systems are transparent,
well-monitored and enforced. Government controls on pricing may be warranted
in certain situations, for example, to ensure that the poorest households have
access to clean cooking fuels and electricity, but other forms of social support are
often more efficient.
Implement reforms in steps – Subsidy reforms should typically be introduced in
small steps; to do otherwise risks abrupt and large price rises that may crystallise
strong opposition. As a country makes the transition away from subsidies, it is
advisable to introduce a formula-based pricing system that ensures retail prices
track international benchmarks. To de-politicise the process, an independent
body should be set-up to oversee energy pricing, helping consumers understand
and accept the reasons for price changes.
Manage the effects – Subsidy reform can have undesirable consequences for some
groups, and social reforms may need to be implemented in parallel to protect
vulnerable groups, such as the poorest households. For example, conditional cash
transfers to those with the lowest income may be required; but the effectiveness
of such measures must be regularly monitored and evaluated.
Consult and communicate at all stages – A comprehensive communication
strategy is essential to convince citizens of the need for reform and the justice
of its implementation. Such a strategy must speak to all energy users, but
especially those most affected by the reforms. Public inquiries, speeches, debates,
workshops and printed material can all contribute.
2
Identify subsidies to Assess impact of Consultations with
be eliminated reform on social all stakeholders
STRATEGIC
PLANNING
3
groups and sectors
Devise transition to Raise public
free-market pricing Assess merit for awareness of need
Draw up sector special assistance for reform
restructuring programmes
4
Communicate plans
Devise fiscal reforms
5
AND INSTITUTIONAL
CAPACITY BUILDING
timetable
Implement
restructuring
Create institutions
needed to implement
programmes
6
Create pricing and
competition authorities
7
Step 1: Introduce
8
IMPLEMENTATION
in parallel with
prices when changes in prices
competition
becomes viable
Step 3: Adjust taxes
Evaluate outcomes 9
and remove non-price
subsidies
10
11
Market determines Targeted social Public acceptance of
OUTCOME
12
revenue needs independent of
government
Sources: IEA based on Beaton, et al. (2013); IEA, OPEC, OECD and World Bank (2010). 13
It remains in the atmosphere for a shorter period of time, compared with CO2, but these 13
characteristics, taken together, mean that reducing methane emissions has the potential to
yield a relatively rapid climate response. This is no substitute for long-term measures to cut 14
CO2 emissions, but the potential to slow the near-term rate of warming means that action
to minimise methane emissions plays an important role in our Bridge Scenario.
16
17. There are different ways to evaluate the effects of methane on global warming. This section uses a value of 30 for the
17
global warming potential (GWP) of fossil-fuel methane, relative to CO2, averaged over 100 years (meaning that volumes
of methane are multiplied by 30 to give equivalent volumes of CO2). The GWP in the shorter term is higher: over 20 years, 18
fossil-fuel methane is estimated to be 85 times more effective at trapping heat than CO2 (IPCC, 2013).
Methane releases to the atmosphere occur both during the production of oil and gas
and during their transmission and distribution, in particular in the case of natural gas. We
estimate that downstream releases amounted to around 24 Mt in 2013 (710 Mt CO2-eq),
or 42% of methane emissions from the oil and gas sectors. Methane leakages from natural
gas pipelines are largest in the United States, Russia, the Middle East and China (which
are the countries with the largest pipeline networks), particularly where the pipelines
are old or poorly maintained. The main causes of leakage are the high permeability of
some pipeline materials (the oldest pipelines are more than 100 years old and made of
cast iron), maintenance activities and incidents due to corrosion, damage or equipment
failure.
The replacement of ageing infrastructure can make a major difference to the incidence
of leaks, but is a challenging and expensive task. Significant improvements can be
made by using materials with lower permeability (such as polyethylene) wherever
possible and optimising the network to reduce the number of joints (i.e. the area most
vulnerable to leakage). Emissions during maintenance are often unavoidable, but
can be mitigated through the flaring of the leaked methane. Reducing the incidence
of leakage is a continuous challenge, involving regular monitoring and efficient and
prompt responses. The benefits have been documented in a study in 2015, sponsored
by the US Environmental Defense Fund and various downstream operators, which
included bottom-up measurement of thirteen urban US distribution systems (Lamb
et al., 2015). The study produced estimates for downstream emissions from 36% to
70% lower than data from the 2011 EPA inventory, with the decrease attributed to
better maintenance activities and improved infrastructure components.
Preventing methane leakage is in the first place a matter of safety, as the accumulation of
gas leaked from pipelines can lead to explosions and is therefore particularly dangerous
in urban distribution networks. Regulation to ensure proper maintenance of pipelines
for safety reasons can have important co-benefits for the climate (measuring the gas
amounts between inlet and outlet stations can help identify major leaks, if the relevant
metering stations are in place). But beyond the assumption of regular maintenance
schedules, no major pipeline rehabilitation is included in the Bridge Scenario, since
this can easily take between 10 to 15 years to implement, involving major investment
and large construction works.
It is estimated that 550 Mt of methane is released into the atmosphere every year, of
which 350 Mt come from anthropogenic sources, amounting to 10.5 Gt CO2-eq. The
contribution of the energy sector to these emissions is highly uncertain, as measured data
are very limited. We have further deepened our analysis of methane emissions for this
special report, and estimate that annual energy-related methane emissions were around
100 Mt (3.0 Gt CO2-eq) in 2013, of which about 56 Mt came from the oil and gas sectors,
31 Mt from coal mining activities and 15 Mt from other sources (mostly the burning of
Of the estimated 56 Mt (1.7 Gt CO2-eq) of methane emissions from the oil and gas 5
sectors today, upstream operations account for around 30% and 27% respectively. These
upstream releases represent the “low-hanging fruit” for reducing methane releases (and
are therefore the focus for action in the Bridge Scenario), as both the sources of these
6
emissions and the technologies and operational procedures to address them are relatively
well-known. Tackling the share of downstream emissions, those estimated to come from 7
transmission and distribution networks, is enticing from a climate mitigation perspective,
but the timelines involved and efforts required are daunting (Box 3.5). 8
In the Bridge Scenario, methane emissions from upstream oil and gas operations are
reduced by 5 Mt of CH4 (0.1 Gt CO2-eq, or 14%) in 2020, and 24 Mt (0.7 Gt CO2-eq, or 9
73%) in 2030, relative to the INDC Scenario. Our previous assessment of the scope for
reducing emissions by 2020 has been revised downwards, given the absence of new policy 10
initiatives outside the United States and the current focus on cost‑cutting in the oil and
gas industry. Unsurprisingly, the largest savings can be achieved in places with large oil
11
and gas production activities such as the Middle East (190 Mt CO2-eq savings in 2030),
Russia (130 Mt CO2-eq) and Africa (80 Mt CO2-eq) and Latin America (70 Mt CO2-eq). In the
case of Africa, the opportunities for reducing methane emissions from upstream oil and 12
gas production are largely concentrated in Nigeria, Algeria and Angola, where the lack of
infrastructure and incentives to market associated gas continues to be a major cause of gas 13
flaring. Globally, the reduction of methane emissions from upstream oil and gas operations
in the Bridge Scenario requires a cumulative investment of $31 billion until 2030. For 13
countries with large mitigation potential and inadequate or weakly enforced regulation
in place, this represents a very cost-effective way to raise climate ambition, potentially
13
drawing on the international community to finance the required investment.
14
18. Other sources derive different estimates for global methane emissions. The Emissions Database for Global
16
Atmospheric Research (EDGAR) and the EPA estimate that energy-related methane emissions (including the coal, oil
and gas sectors) were 129 Mt in 2010, while the UNFCCC reports these emissions to be 38 Mt for Annex I countries
in the same year. Such variations stem both from differences in the emissions factors used for each activity, as well as
17
differences in the data for activity levels.
19. Our new global estimate takes into account EPA’s latest available data for US methane emissions, which have been 18
revised down in the context of a review process and recent measurements (US EPA, 2015).
United States
500
China
INDC
Africa
INDC
400
Bridge
Russia
Bridge
Bridge
300 Middle East
200
100
Two factors account for most of the upstream methane savings in the Bridge Scenario. In
the first case, the pursuit of energy efficiency measures across all end-use sectors reduces
demand for oil and gas and thereby the amount of methane leaked during oil and gas
operations (i.e. a reduction in activity levels). The second reason is a series of measures
directly designed to reduce the emissions associated with upstream activity, all based on
known technologies and operational best practices:
Enhanced efforts to reduce flaring of natural gas, not only a wasteful and unproductive
use of gas, but also a practice that, as with many end-uses, results in methane releases
because of incomplete burning (especially in windy conditions).
Increased inspection and repairs to reduce involuntary or “fugitive” emissions from
leaky valves, seals or pipes.
Application of best practice to reduce the venting that occurs as part of normal
operations: there are relatively low-cost measures available to achieve this, such as
minimising emissions during work-overs and reducing the frequency of start-ups and
blow-downs.
A focus on reducing emissions during well completion operations: this is a particular
concern in the case of unconventional gas, because of the large amount of methane
that can be released to the atmosphere during the flowback phase after hydraulic
fracturing. Best practice is to use a so-called “green completion” to recover
hydrocarbons, including methane, from the flowback fluid (instead of allowing them
to be vented or flared. The methane can then be marketed, offsetting the additional
cost).
More complex reductions, involving modifications such as the installation of pressurised
storage tanks with vapour recovery units: these take time and larger investment, and
so have a strong impact on emissions reduction only towards 2030.
14
16
20. The IEA’s World Energy Model (WEM) was coupled with the OECD’s ENV-Linkages model to determine the level of
17
policy ambition that complies with GDP-neutrality relative to the INDC Scenario in any region or country considered
individually in WEM. The analysis of GDP-neutrality does not extend to certain co-benefits such as those arising from 18
reducing local air pollution or avoiding climate change, which have the potential to further boost economic growth.
8% INDC
Scenario
Bridge
6% Scenario
4%
2%
Within the total package of policy measures adopted in the Bridge Scenario, there are
some which will have a positive effect on economic growth, while others will reduce
the value added from individual sectors, due to the additional costs that sector will
bear. The latter is particularly true for energy sectors that are concerned with supply
and transformation. The power sector incurs additional costs to compensate for the
reduced availability of inefficient coal-fired power plants and to increase investments
in renewable forms of energy. Total investment in transmission and distribution (T&D)
grids is reduced, as electricity demand (and therefore generation) is lower than in
the INDC Scenario, although this effect is partially offset by increased investment
to integrate variable renewables. In the Bridge Scenario, cumulative power sector
investments to 2030 are $360 billion lower than in the INDC Scenario. In oil and gas
production, reduction of upstream methane emissions involves additional cost,
estimated at $31 billion to 2030, but overall investment in fossil-fuel extraction and
distribution is reduced by $1.2 trillion, compared with the INDC Scenario, due to lower
fossil-fuel demand (Figure 3.18).
The investment required to exploit the economic potential for energy efficiency in the
industry, buildings and transport sectors is higher in the Bridge Scenario relative to the
INDC Scenario. The increase of energy efficiency investment limits the ability of households
(which are responsible for a large part of the investment made) and firms to invest in
other activities. But the reduction of fuel bills outweighs the additional investment needs
in both sectors, freeing up additional resources to such an extent that, overall, action on
energy efficiency boosts economic growth. Increasing the energy efficiency of appliances
and lighting, for example, helps to reduce household electricity bills in 2030 in the Bridge
Scenario by 6% on a global average.
2 400 Low-carbon
Power T&D
2 000
Fossil fuels 3
1 600
1 200 4
800
5
400
7
Household consumption, in general, is a particularly important driver of economic growth.
The share of disposable income that is allocated to energy expenditures varies by country,
depending, for example, on the level of taxation and extent of domestic energy resources. 8
Oil consumption (e.g. for mobility purposes) usually accounts for a large share of household
energy expenditure. While the recent sharp drop in international oil prices may temporarily 9
relieve household budgets, our view on the longer term outlook for oil price developments
remains generally unchanged and suggests a significant increase over today’s level.
10
Increasing energy efficiency can help insulate households against such price increases – in the
Bridge Scenario, households in developed countries see a reduction of their average annual
energy expenditures in 2030, relative to today (Figure 3.19). In developing countries, energy 11
expenditures are rising due to increasing energy demand; but, in the Bridge Scenario, the rise
until 2030 is generally lower than in the INDC Scenario, due to improved energy efficiency. 12
household
5 000 75 Other 13
Gas
4 000 60
Oil
14
3 000 45 Electricity
Total savings of
2 000 30 all households 16
(right axis)
1 000 15
17
2013 2030 2013 2030 2013 2030 2013 2030 2013 2030 2013 2030
European United Japan China India Southeast 18
Union States Asia
60 Coal
Billion dollars (2013)
50 Oil
Gas
40
30
20
10
-10
-20
United European China India Southeast
States Union Asia
Note: Positive values are net savings in fossil-fuel trade bills, relative to the INDC Scenario.
Energy access
Secure access to modern energy has underpinned the development and prosperity gains of
every advanced economy to date. Expanding access to modern energy services, including
electricity and modern cooking facilities, is an important objective for many developing
countries. Aligning these priorities with decarbonisation goals is a crucial challenge.
5
Figure 3.21 ⊳ Global population with and without access to electricity and
clean cooking in the Bridge Scenario
6
100% Without
electricity access 7
80% With electricity
access
Without clean
8
60% cooking access
With clean
cooking access
9
40%
5.7 6.5 7.0 7.4 4.3 5.0 5.5 6.0
20%
billion billion billion billion billion billion billion billion
10
11
2012 2020 2025 2030 2012 2020 2025 2030
12
In order to achieve a similar level of energy access as in the INDC Scenario, care in policy
design is required to protect the poorest against possible adverse impacts from the
13
proposed policies in the Bridge Scenario. For example, careful implementation of fossil-
fuel subsidy reforms needs to protect the poorest by redirecting at least a proportion of
savings to social programmes (Box 3.4). Under most existing forms of policy intervention, 13
the benefits tend to accrue disproportionately to wealthier segments of society. One
example of successful reform is the Kerosene to LPG Conversion Programme in Indonesia, 13
designed to facilitate a switch to the use of LPG for cooking purposes, thereby improving
access to modern energy and reducing the financial burden for the state associated with 14
the subsidies to kerosene. A similar programme has reduced kerosene use in New Delhi
and is currently being rolled out in several other Indian cities.
16
Energy efficiency policy also requires specific provision for the poorest. At a macro level,
increasing energy efficiency reduces the need to build supply-side capacity in order to 17
provide electricity access, usually allowing more people to be connected at the same
level of investment. It can also reduce the adverse health effects of using kerosene
lamps for lighting, or diesel generators for electricity during times of outage. At a micro
18
Increasing investment for renewable energies generally has positive effects on increased
electricity access, for as long as the investment is additional. Off-grid renewables solutions,
such as solar home systems or small hydroelectric plants, can boost electricity access in
regions with important renewables potential, such as sub-Saharan Africa or India. In cases
where a large-scale push is being made to increase on-grid renewables, the integration
costs of renewables could increase electricity tariffs and put affordability at risk. Lower
tariffs for a basic level of consumption in the residential sector may be a satisfactory means
to mitigate the problem (while simultaneously incentivising energy efficiency), but the
system will need to be carefully monitored for unintended effects.
Highlights
• The long-term transition to an energy system consistent with the 2 °C climate
goal, reflected in the 450 Scenario, entails fostering the development of new
technologies alongside the measures in the Bridge Scenario in the short term. These
developments make way for the widespread deployment of emerging technologies
to 2040 and beyond, keeping emissions in line with international climate goals.
• Deploying low-carbon technologies that are mature and commercially available in
most regions achieves close to 60% of the additional emissions reductions in the
450 Scenario relative to the Bridge Scenario. The remaining portion comes from
the deployment of emerging technologies. Government action to bring forward the
additional low-carbon technologies in the 450 Scenario rely on intensifying RD&D,
supporting market development and providing enabling infrastructure.
• Variable renewables account for significant investment today and are one of the most
strongly deployed low-carbon options in the 450 Scenario, saving 37 Gt CO2 over
the period to 2040. Integrating increasing levels of variable renewables eventually
requires more flexibility in the power system to maintain reliability, including
conventional power plants, energy storage and demand response. Speeding up
progress for some technologies, such as batteries, could ease the transition.
• CCS technologies are vital to decarbonising the power supply and industry in the
450 Scenario, capturing 52 Gt CO2 from 2015 to 2040, of which 5.1 Gt CO2 is in 2040.
The fuel consumption by CCS-equipped facilities creates revenues of $1.3 trillion
for both coal and gas producers respectively from 2015 to 2040. Deploying CCS
at scale drives down costs and improves its competitiveness as a CO2 abatement
option in the power sector. Knowledge of CO2 storage opportunities is expanding,
but national level attention is needed to support the widespread adoption of CCS.
• Today, transport-related emissions account for over 20% of global energy-related
CO2 emissions and are set to increase without the strong uptake of alternative fuel
vehicles. In the 450 Scenario, the deployment of electric vehicles and use of advanced
biofuels reduce oil consumption by 13.8 mboe/d in 2040 and reduce CO2 emissions
by 11.5 Gt from 2015 to 2040. The falling emissions intensity of grid electricity over
time, which fuels electric vehicles, helps to lower transport-related emissions.
• The transition to a low-carbon economy depends upon overcoming current
challenges and giving the right signals to innovators and financiers within an
appropriate market structure. Government intervention is needed to create
sustainable markets for low-carbon technologies, fill in RD&D funding gaps, create
the enabling infrastructure and encourage international collaboration.
Achieving an energy system which is compatible with climate goals remains a daunting
task. All the required tools are not yet to hand. But this chapter sets out a feasible path
consistent with the 2 °C goal, building on the achievements of the Bridge Scenario and
showing what steps are required. The world must manage the legacy of its existing energy
system, while harnessing established low-carbon energy sources and accelerating the
development and deployment of new technologies that have yet to be adopted at scale.
The analysis in this chapter is one of a number of possible pathways to 2 °C. One defining
element of the 450 Scenario is the increasing presence and weight of carbon pricing
around the world, supporting the expansion of all low-carbon technologies. It draws on the
potential contributions of emerging technologies across the energy system, but does not
rest on technological breakthroughs which are as yet only aspirations, nor is it offered as a
definitive, optimal pathway. Instead, the 450 Scenario depicts a pathway to the 2 °C climate
goal that can be achieved by fostering technologies that are close to becoming available at
commercial scale. Consistent with established and recent policy trends, it also incorporates
a host of regionally specific factors, including the extent of policy support for technologies,
public acceptance of different technologies, technology supply chains, areas of research,
development and demonstration (RD&D), consumer behaviour, energy market frameworks
and resource endowments. The world invests around $1.7 trillion per year on average from
2015 to 2040 into its energy-supply infrastructure in the 450 Scenario. However, this is
within 1% of the average energy-supply investment over the same period in the Bridge
Scenario, as energy demand is moderated through energy efficiency efforts and emerging
technologies reach maturity.
Advanced biofuels
Electric vehicles
End-use efficiency
CCS industry
Conventional biofuels
CCS power
Nuclear
Supply-side efficiency
Other renewables
Wind and solar PV Hydro, bioenergy and geothermal
Notes: End-use efficiency includes the effect of reduced activity levels, process changes and fuel switching. Supply-side
efficiency includes fuel switching by sector, such as coal-to-gas switching in power generation. Electric vehicles here take
into account pure-electric and plug-in passenger and commercial light-duty vehicles.
Fostering the development and deployment of emerging technologies expands the number
of low-carbon technologies available at scale on a commercial basis, providing more flexibility
for national mitigation strategies and lowering the overall cost. In the 450 Scenario, about
40% of the cumulative emissions reductions over the Bridge Scenario are attributable to the
widespread adoption of emerging technologies. Variable renewables, mainly wind power and
solar photovoltaics (PV), account for about 6.3 Gt of additional CO2 abatement beyond their
central role in reducing emissions in the Bridge Scenario. While wind power and solar PV
technologies are available today at commercial scale, they are grouped here with emerging
technologies because further improvements are expected to drive down costs substantially
and unlock more widespread deployment. Carbon capture and storage (CCS) becomes viable
in the 450 Scenario and is widely deployed in the power and industry sectors, accounting
for one-third of the additional CO2 reductions needed to put the world on track to 2 °C.
Alternative fuel vehicles contribute a smaller share of the total reductions, but are rapidly
gaining market share by 2040 and point the way to deeper emissions reductions thereafter.
Each of these three sets of technologies requires a carefully targeted approach to overcome
the associated challenges if it is to contribute on the necessary scale to the realisation of the
450 Scenario pathway and even deeper decarbonisation of the energy system beyond 2040:
Variable renewables 8
Opportunity
9
Driven by widespread policy support and declining costs, annual global investment in
renewables based power generation technologies already exceeds that in other types of
power plants and these technologies will feature increasingly as an essential element in 10
decarbonising the power sector. Annual investment in renewables reaches $400 billion in
2025 in the 450 Scenario, a level attained five years earlier than in the Bridge Scenario. 11
Investment continues to increase after 2025, with average investment in renewables over
2026-2040 running at $470 billion per year. Total installed renewables-based capacity more 12
than triples from today’s level to reach 6 200 GW in 2040, almost 60% of total installed
capacity at that time.
13
Installed capacity of variable renewables grows from about 450 GW today to 3 300 GW in
2040, representing more than 30% of total global installed capacity. Investment in variable 13
renewables accounts for more than half of total annual renewables investment throughout
the period 2015 to 2040 and far outpaces investment in other low-carbon technologies
13
(Figure 4.2). The increased investment creates a positive cycle, driving down the capital
costs of new projects, making them increasingly financially attractive and so expanding
market opportunities, in turn leading back to higher investment and greater deployment. 14
Together, variable renewables become a significant share of the power generation mix in
many regions by 2040; they account for over 30% of total generation in Europe, more than 16
20% in the United States, Japan and India, and close to 15% in Latin America and Africa.
The expansion of variable renewables saves about 37 Gt CO2 from 2015 to 2040, compared 17
with emissions if the rest of the power mix in each region were expanded proportionally
to replace variable renewables. While investment in low-carbon power technologies is
18
substantially higher in the 450 Scenario compared with the Bridge Scenario, it does not
2015-2025 2026-2040
300 450 Scenario
Billion dollars (2013)
Solar PV
250
Wind
200 Other
Bridge Scenario:
150 Total
100
50
Var. Hydro Other CCS Nuclear Var. Hydro Other CCS Nuclear
renew renew renew renew
Challenges
The reliability of power supply depends on the ability to match supply and demand in
real time, a task which will become more difficult at high penetration levels of variable
renewables. While variable renewables have been capturing large portions of recent
investment in new power capacity, there is little experience as yet of integrating these
technologies into power systems at medium penetration levels, let alone the higher levels
reached by 2040 in the 450 Scenario. Even in the Bridge Scenario, where one of the five
measures is enhanced investment in renewables, experience in handling high shares of
variables renewables is limited to a few regions, mainly the European Union and India.
While in the 450 Scenario, the deployment of variable renewables is widespread across all
regions and is pushed to higher levels of penetration, meaning integration challenges will
be faced in many more regions to some degree.
Integration challenges are related to the fact that output from a variable renewable energy
technology at any point in time depends on the momentary availability of renewable energy
sources (not including those which incorporate energy storage, such as concentrating solar
power [CSP] with thermal storage). The degree of challenge depends on the additional
variability introduced into the system as a result of the output from variable renewables
and the flexibility of the rest of the power system (IEA, 2014a). In other words, the
challenges are related to the extent that the variability of residual electricity demand
Solar PV 6
400 Wind
Bioenergy
Oil 7
300
Gas
200
Coal 8
Hydro
Nuclear
100
9
10
00:00 04:00 08:00 12:00 16:00 20:00 00:00
Notes: The illustrative load curve is based on measured hourly load data in India in June 2012. Increasing demand for 11
cooling or other evolving electricity demands could alter the pattern of electricity demand.
12
Consider an illustrative example of the hourly power supply on a sunny day in India in June
(pre-monsoon season) 2040, based on the 450 Scenario, where nearly 190 GW of solar PV 13
capacity represents close to 40% of peak demand (Figure 4.3).1 The example balances supply
and demand over the whole of India, assuming the complete integration of the regional
power grids. The rapid expansion of solar PV output around mid-day has a large effect
13
on the rest of the power system. In total, output from the rest of the power system must
be reduced by about 40% in three hours; and, shortly thereafter, waning solar PV output 13
means that the rest of the system needs to ramp up strongly (increasing output by some
100 GW in three hours). In the system illustrated, output from coal- and gas-fired power 14
plants, hydropower and CSP can be adjusted to the extent and at the speed necessary to
accommodate the variable solar PV output. However, the adjustments required of these
16
power plants are much larger in order to accommodate the variable output of solar PV
than they would be to match changes in electricity demand. On the one hand, transmission
17
1. World Energy Outlook 2015, to be released 10 November 2015, will contain a special focus on the energy outlook in 18
India.
The integration of high levels of variable renewables into power systems may also require
market framework reforms to guarantee a sufficient level of investment in the conventional
power plants needed to keep the system in balance, together with other measures to shift
demand when the sun is not shining or the wind is not blowing. Failing to address these
needs in advance will negatively impact the reliability of the power system. For example,
failing to expand grid interconnections can leave small regions with an imbalance of supply
and demand which could have been accommodated over a larger region with sufficient
interconnections. Difficulties of this sort, if not overcome, could stifle the support of
further renewables deployment and put greater pressure on other low-carbon options,
such as nuclear power and CCS.
Solutions
A range of solutions, both on the supply and demand sides, can help overcome the
integration challenges facing variable renewables, each with different strengths and
weaknesses (Table 4.1). Initially, there is unlikely to be a problem, but as variable renewables
gain market share and increase the variability that the rest of the power system has to
manage, some measures will be needed, such as ensuring that the grid infrastructure is
sufficiently developed in order to balance the output from variable renewables over a large
region. Expanding grid infrastructure also helps to take advantage of the flexibility of the
rest of the power plant fleet. Eventually, at high levels of variable renewables, demand-
side measures must also be part of the solution. Indeed, some demand-side measures are
available at low cost and should be considered well before they are necessary to maintain
reliability. While many measures exist today, not all have yet achieved the performance
or cost level needed to make them attractive. Further technology development, through
RD&D activities, is an essential element in facilitating the degree of decarbonisation of the
power sector that is required to stay on the path to 2 °C beyond 2040.
Interconnections
5
Conventional capacity
6
• Hydropower
• Coal-fired
• Gas CCGT
7
• Gas and oil GT
Curtail renewables
8
Smart grids 9
Energy storage
• Pumped hydro 10
• Batteries
Demand response 11
*Indicates the ability of a system with a high penetration of the measure to integrate high shares of variable renewables,
for example, without additional measures conventional capacity (even hydropower) cannot accommodate very high 12
levels of variable renewables. **Indicates the ability of a measure to provide ancillary services, such as frequency
regulation.
13
Notes: = high, = moderate, = low to none. CCGT = combined-cycle gas turbine; GT = gas turbine.
13
Energy storage technologies are able to adjust both the supply of electricity to the grid and
13
demand for electricity from the grid, making it both a supply- and demand-side measure
to some degree. Moreover, energy storage technologies may be deployed in large-scale
projects by electricity suppliers or small-scale projects by households and other end-users. 14
Energy storage technologies have impressive performance capabilities to address many
needs related to the integration of variable renewables, but many are relatively expensive. 16
Pumped hydropower is the exception, as its relatively low cost explains why it makes up
almost all energy storage capacity connected to the grid today. Other grid-connected 17
energy storage options collectively account for a very small share of total energy storage
capacity and employ a wide array of technologies that could play an increasingly important
18
role in power systems at higher penetration levels of variable renewables and as their
Today, energy storage technologies account for about 145 GW of installed capacity
worldwide (2% of global installed power generation capacity). Pumped storage
hydropower accounts for nearly all of this capacity, supplemented by a mix of battery
systems, compressed air energy storage, flywheels and hydrogen storage. Strong
decarbonisation efforts in the power sector could push global storage installations to
well over 400 GW by 2050 (IEA, 2014b). The value of storing electricity varies according
to the circumstances. Beyond storing electricity when it is abundant and supplying it
when it is scarce, electricity storage can offer a variety of services, including improving
grid power quality, improving the quality of energy services in off-grid electrification,
reducing investment needs in transmission infrastructure, providing independence
from the power grid and enabling electrification of end-uses, e.g. transport.
Additional RD&D spending on storage can lead to cost reductions that, combined with
ongoing cost reductions for variable renewables, could change the face of the power
system. For example, batteries are an attractive RD&D target, as they offer modularity,
controllability and responsiveness; but their energy density, charging times and overall
costs need considerable improvement to unlock their full potential. Battery technology
improvements would provide gains in applications beyond the power sector, particularly
in transport. While electricity storage receives most attention and RD&D funding, other
storage options, including thermal storage, should not be overlooked. In many cases,
thermal storage is more economic than electricity storage and increases the efficiency
of the energy system by using waste heat. Other technologies that consume electricity
to produce a useful product that can be stored in large quantities, such as hydrogen or
desalinated water, should also be given increased attention in RD&D efforts.
2. For example, FERC Order 755 in 2011 and Order 784 in 2013 opened ancillary markets to energy storage and
Order 1000 in 2011 requires the consideration of both transmission and transmission alternatives, which includes energy
storage and demand response, during regional transmission planning processes.
16
3. Bioenergy with carbon capture and storage (BECCS) enables negative emissions because CO2 sequestered during the
growth of biomass is not released after the biomass is combusted or refined to produce biofuel. The CO2 captured and
stored underground outweighs the emissions related to producing the biomass, including those from land-use change
17
and transformation into the final product. BECCS could be used in a wide range of applications, including power plants,
combined heat and power plants, flue gas streams from the pulp and paper industry, fermentation in ethanol production 18
and biogas refining processes.
6 Industry
Gt
Other non-OECD
5 India
China
Other OECD
4
United States
3 Power generation
Other non-OECD
2 India
China
Other OECD
1 United States
Note: Industry includes the following sectors: steel, cement (energy- and process-related), chemicals and paper
production; oil refining; coal-to-liquids, gas-to-liquids and natural gas processing.
In the 450 Scenario, installed capacity of power plants with CCS technologies begins to
increase notably from the 2020s (averaging 20 GW per year) and growing rapidly in the
2030s (averaging over 50 GW per year). Global CCS capacity in the power sector reaches
740 GW in 2040, 20% of fossil-fuelled power generation capacity at that time. The global
In industry, CO2 capture increases to more than 2 Gt in 2040 in the 450 Scenario, playing
6
an important role in putting the overall emissions from the sector on a declining path.
Most of this CCS capacity is installed in non-OECD countries, led by China, India, Russia 7
and the Middle East, with lesser amounts in OECD countries, led by the United States and
Europe. Important industrial sectors, such as iron and steel, and cement, already see CCS as 8
a serious abatement option if they are to achieve deep cuts in emissions. In large part, this
is because the chemistry of their processes produces CO2 that cannot be avoided without 9
radically changing inputs and products, with major knock-on implications for their value
chains. In the 450 Scenario, CO2 capture is led by the cement sector (1.0 Gt CO2 in 2040),
iron and steel (nearly 500 Mt) and chemicals (about 300 Mt CO2). To reach these levels
10
of CO2 capture means that around half of global cement and steel production capacity is
equipped with CCS in 2040, along with a large share of chemicals production. In the case 11
of chemicals, about 60% of the savings comes from ammonia and methanol production,
which offer an attractive opportunity for early action due to the purity of the CO2 in their 12
flue gases, making its capture relatively inexpensive. Installing CCS would raise operating
costs for power plants (by lowering efficiencies); but it also acts as a safeguard for assets
13
in power generation and industry which could otherwise become stranded (see Chapter 3,
Box 3.3), as well as preserving value for fossil-fuel producers. For example, over the period
to 2040 in the 450 Scenario, facilities equipped with CCS in the power and industry sectors 13
consume about 15 billion tonnes of coal equivalent that would be worth $1.3 trillion and
4 000 billion cubic metres of natural gas worth about $1.3 trillion at the prevailing fuel prices 13
in the 450 Scenario. Countries and companies with revenue streams from the extraction
and processing of fossil fuels thus have a clear interest in supporting the development and 14
deployment of CCS.
16
17
18
TWh
CCS retrofits
800 8 000 New-build CCS
Electricity demand
600 6 000 (right axis)
400 4 000
200 2 000
2014
2020
2025
2030
2035
2040
2014
2020
2025
2030
2035
2040
While it is technically feasible to add post-combustion CO2 capture to almost any plant,
the economic decision to retrofit will be more attractive for larger plants that have higher
efficiencies and flue gas desulphurisation, and have yet to reach the end of their technical
lifetime. Nearly half of China’s existing fleet is likely to meet these criteria in 2025 and, as such,
could be excellent candidates for the addition of CCS. Available space onsite for the capture
equipment and good access to facilities for CO2 transport and storage will also be critical
factors for CCS retrofits. Up to three-quarters of China’s existing coal-fired power plants are
within 250 km of potential storage sites, one indicator that significant retrofit potential exists.
For new plants, it is important to ensure that they are located and built making provision for
future CCS installation, reserving the required space onsite and situated, where possible, in
proximity to CO2 storage sites. A first step is to incentivise public or private organisations to
explore CO2 storage capacity and bring CO2 storage services to the market.
Coal CCS
6 000 $/kW
300
CCS
Coal-to-gas
Coal-to-gas
Solar PV
Solar PV
Solar PV
CCS
CCS
Onshore wind
Onshore wind
Onshore wind
Notes: coal-to-gas compares the operating costs of existing gas CCGTs with existing coal-fired power plants. Onshore
wind, solar PV (utility-scale) and CCS compare the range of projected levelised costs of each technology with the levelised
cost of a new gas CCGT, not including carbon costs. The range for solar PV in 2020 also includes comparison with the
levelised cost of a new gas GT, as its output largely coincides with peak hours of demand. CCS includes the range of
abatement costs for new builds and retrofits of both coal- and gas-fired power plants. The levelised costs of utility-
scale solar PV are projected to fall from $105-140 per megawatt-hour (MWh) in 2020 to $80-105 per MWh in 2030 and
$70-95 per MWh in 2040.
In China, the CO2 abatement options in the power sector also include hydropower, which
offers the lowest-cost emissions reductions. Beyond hydropower and nuclear power, the
four main abatement options in the power sector are the same as those in the United States,
Solutions
Nonetheless, CCS does become a widely competitive CO2 abatement option by 2040 in
the 450 Scenario, with the United States and China accounting for about 80% of the CCS
installations in the power sector. This level of penetration can be brought forth by three
types of actions:
Sales of EVs also grow rapidly in the 450 Scenario. From around 2020, they make a
notable impact on global vehicle sales, reaching nearly 25% by 2030 and more than 40%
by 2040 (Figure 4.7). Total annual EV sales reach nearly 80 million vehicles by 2040,
equivalent to the global vehicle sales of all types in 2010. Primarily, the increase in sales
in the 450 Scenario is driven by the large vehicle markets: China, India, United States and
European Union. Road transport provided by EVs reduces global oil demand by around
1.5 mb/d in 2030 and nearly 6 mb/d in 2040. One primary benefit of using EVs, which use
a highly efficient electric motor for propulsion, is that they can shift transport emissions
from millions of mobile sources to a much smaller number of stationary sources in the
power sector. If centralised power generation relies on low-carbon sources, as in the
450 Scenario, EVs effectively reduce overall GHG emissions. Climate change is not the
only reason to promote electric vehicles; as EVs do not emit air pollutants and make
little noise, they are well suited to urban use. In China, for example, air quality concerns
have already supported the introduction of 230 million electric scooters in place of diesel
scooters (IEA, 2015b). Innovative programs, such as the Autolib system in France, can
also serve to increase the uptake of EVs in urban areas, displacing the need for personal
vehicles.7
A shift to EVs always reduces CO2 emissions directly from the transport sector, as there
are no emissions at the point of use. However, power sector emissions may increase due
to the additional electricity demand from EVs (which also have the advantage of higher
motor conversion efficiencies compared with conventional cars). Therefore, the extent to
which EVs can contribute to energy-related CO2 emissions reductions depends critically on
the carbon-intensity of the power mix. Today, EVs generally offer overall CO2 mitigation
benefits compared with new gasoline internal combustion engines (ICE) cars, unless the
power system is heavily dominated by coal and the overall emissions intensity of electricity
is 800 g CO2/kWh or above. Due to their relatively carbon-intensive power mix, the benefit
7. Autolib is a subscription-based electric vehicle sharing programme in Paris, France. Autolib estimates that
3 000 vehicles will displace ownership of 22 500 private vehicles, www.autolib.eu/en/.
200
Gasoline ICE Electric vehicles
2013
4
g CO2/km
2030:
160 Bridge Scenario 5
450 Scenario
120
6
80
7
40
8
Global Global United China European India
States Union
Notes: Emissions intensity of electric vehicles is based on the emissions intensity of grid-supplied electricity by region. 9
The global figure is based on the world average emissions intensity of electricity.
10
Hydrogen fuel-cell vehicles can also contribute to decarbonisation of the road transport
sector. The idea of hydrogen as a transport fuel for vehicles has attracted the interest of
11
industries, government and the public since the 1960s. There are signs of renewed attention
today. Toyota has just launched the Mirai (“Future”) in Japan, the first commercially
available hydrogen fuel-cell car; Hyundai is targeting to sell several thousand vehicles soon 12
(the Hyundai Tucson Fuel-Cell Electric Vehicle has been available for lease since mid-2014);
and Honda has announced its intention to launch a hydrogen-powered car in 2016. During 13
the past decade, several global public-private partnerships have been created to secure
funding for co-ordinated action to promote the application of fuel-cell technology beyond 13
the car industry (e.g. in California, Europe, Japan, Korea and recently in Dubai). But no such
alternative applications on a commercial basis have yet been announced and widespread
adoption of hydrogen has so far failed to materialise.
13
One big potential advantage of hydrogen-fuelled vehicles is that their range is not limited 14
like that of an EV, a subject of considerable consumer anxiety. The refuelling time is also
generally much lower than the charging time of a battery. If hydrogen is produced from
low-carbon sources, the CO2 benefits offered are comparable to those of EVs. There are,
16
however, serious challenges constraining the outlook for deployment of hydrogen vehicles
(discussed below) and their use in the 450 Scenario remains limited. 17
18
Progress related to the production of advanced biofuels has also been slow and currently
they are not commercially available at scale. However, some notable progress was
registered in 2014. Five commercial-scale advanced biofuels production plants opened,
three in the United States and two in Brazil (IEA, 2015b). The combined capacity of these
plants, at 9 000 barrels per day (in volumetric terms), makes up about one-fifth of current
global advanced biofuels production capacity but less than 1% of total biofuels production
capacity today. The United States is the only country which has volume requirements for
advanced biofuels in 2015 (Renewable Fuels Standard), though it has had difficulty meeting
The two major challenges associated with advanced biofuels are reducing production costs
3
and ensuring sustainability. Most of the technologies today have total production costs
significantly greater than $3/gallon (IRENA, 2013), which is well beyond the untaxed price of 4
petroleum products. The price level of conventional oil will be of critical importance to the
long-term prospects for biofuels as a competitive fuel. The second issue, the sustainability 5
of conventional biofuels, has been in question for many years. As a result, the European
Union, to take one example, has restricted the extent to which conventional biofuels can
6
contribute to biofuels targets. It is therefore imperative to ensure that advanced biofuels
do not raise the same concerns.
7
As to the use of hydrogen in road transport, the challenges are numerous, ranging from
the high costs of the hydrogen fuel-cell vehicle to the absence of refuelling infrastructure 8
and consumer scepticism. Despite the recent notable step forward of the launch of the first
commercial models, hydrogen fuel-cell vehicles still have many hurdles to overcome before
they can achieve mass commercialisation. The most fundamental challenge is the need
9
to build-up an entirely new hydrogen generation, transmission and distribution and retail
network (IEA, 2015d). Although decentralised hydrogen production is feasible, large-scale 10
deployment of hydrogen fuel-cell vehicles is likely to hinge on the development of such a
dedicated integrated infrastructure. 11
Solutions 12
Given the variety of new technologies under development in the transport sector and the
early stage of their deployment, it is important for government actions to enable innovation 13
across a broad set of technologies in road transport. Market-driven, technology- and fuel-
neutral policies (e.g. such as greenhouse-gas emissions standards per vehicle-kilometre
travelled), based on sound science and offering cost-effective pathways to achieve societal
13
goals of energy security and GHG emission reduction, are to be preferred. Technology
neutral policy measures can be complemented by targeted and temporal incentives to help 13
overcome obstacles during early advancement and market introduction. The 450 Scenario
assumes the (supported) emergence of a variety of solutions, without imposing a shift to 14
other modes of transport, i.e. to non-private, non-motorised transport modes, or measures
to suppress demand for mobility. It will nevertheless be important to keep open the 16
opportunity for more radical possibilities, especially in urban areas where good planning
might induce behavioural changes which contribute significantly towards decarbonising
transport or, more broadly, the demand for mobility (Box 4.2).
17
To put EVs on track for their role in the 450 Scenario, RD&D must continue with 18
government support to overcome obstacles to commercial success, particularly related to
Technological change is not the only route to reducing carbon emissions from transport.
Policies to reduce travel needs include land-use planning instruments that favour
compact urban design and mixed-use development (e.g. commercial and residential),
pricing and other measures encouraging travel demand management, such as the
promotion of virtual mobility (e.g. tele-working), freight delivery co-ordination and
logistical optimisation to decrease travel volume by finding shorter, more efficient
routes. Such measures can be complemented by policies to encourage movement
from private motorised travel to more energy-efficient modes, such as public transit
systems, cycling, and rail. In densely populated urban environments, the availability of
affordable, frequent and seamless public transport connections can be provided cost
effectively, especially when taking into account the advantages of lower road space
utilisation, lower exposure to pollutant emissions and reduced congestion.
The impact of such policies can be large. Cuenot et al. (2012), using the IEA Mobility
Model, have shown that a 25% reduction in car and air travel in 2050 can reduce global
energy use and CO2 from transport by 20%. The IEA’s Energy Technology Perspectives
has shown that policies such as those considered here can reduce global transport
energy consumption and emissions by 15% or more by the middle of this century in a
stringent mitigation case, primarily through better management of travel demand and
moving passenger and freight travel to more efficient modes (IEA, 2015a).
The measures necessary to achieve these effects include integrating urban and
transport planning, facilitating investment in public transport infrastructure, supporting
well-integrated public transport networks and options that lead to quicker vehicle
utilisation turnover (e.g. car-sharing schemes). Some developments might take place
naturally: the younger generation, particularly in urban areas, tends increasingly to
prefer alternative transport options to the use of personal cars (e.g. public transport,
cycling, walking), recognising that what counts is the transport service, rather than the
means (personal cars). Transport demand reduction may also stem from the use of
modern information and communication technologies.
8. For more on the implications of lower global oil prices prevailing into the long term, see the IEA’s World Energy
Outlook 2015, to be published on 10 November 2015.
Government investments in RD&D can provide the leadership necessary to yield major
13
returns in terms of jobs, investment and results. Financing for large-scale CCS projects
is needed in the near term to generate the improvements that will allow lower costs to 13
emerge from large-scale activity in the long term. In the case of EVs, the commercial race
to develop the best battery has already begun. For variable renewables, attention may 14
need to be directed more to the provision of system flexibility than simply to more efficient
generation technologies.
16
To achieve a self-sustaining low-carbon transition will require parallel investments in the
enabling infrastructure. Governments have a crucial role to play in ensuring that such 17
projects go ahead in a timely manner, in many cases, by investing directly in them, but also
by providing the conditions which attract multilateral financial commitments. CO2 storage
18
capacity development, provision of EV charging stations and encouragement of additional
9. For example, IEA Energy Technology Initiatives enable independent groups of experts from industry and government
to share resources and expertise in order to find solutions to energy challenges. The Innovation for Cool Earth Forum
(ICEF) is another example of an international platform that brings together different stakeholders to consider how
innovation can best address climate change.
Highlights
• The emergence from COP21 of unity and clarity of purpose at the highest political
level, expressed as ambitious near-term action and clear commitment to a low-
carbon future, can transform the energy sector. The submission of national climate
goals to COP21 is not the end of a process, but the basis on which to create a
“virtuous circle” of increasing ambition. Four key pillars are needed to make the
Paris agreement a success:
1. The agreement should set the conditions necessary for a global peak in total
energy-related emissions to be reached in the near future. The integration of
the energy sector measures of the Bridge Scenario into nationally determined
climate goals for 2025, coupled with an immediate start to action, could
achieve such a peak by 2020, without prejudice to sustained economic growth
and development. Seeing global emissions peak and a growing number of
countries decouple economic growth from emissions growth will transform
national expectations and action.
2. A five-year review cycle is needed to provide the opportunity and incentive for
agreement on setting higher objectives over time. Following the Bridge Scenario
to 2025 enables emissions to pass their peak and makes power sector investment
fully compatible with a 2 °C scenario (committed emissions from new power
generation in the INDC Scenario would be 19 Gt higher). From 2025, the level of
ambition must rise beyond that of the Bridge Scenario to bring global emissions
well below 2010 levels by 2030, onto a path consistent with the 2 °C goal.
3. The current goal to keep temperature rise below 2 °C should be supplemented
by re-expressing it as a collective long-term emissions goal coupled with
nationally determined low-carbon development pathways informed by a vision
of the long-term collective goal. Such supplementary expressions of the target
can guide energy sector investment, retirement and operational decisions,
provide an incentive for the development of new technologies, drive the
necessary adaptation of market structures and spur implementation of strong
domestic policies, such as carbon pricing – all necessary to achieve the required
level of energy sector emissions reductions beyond 2030.
4. The COP21 package and subsequent decisions should provide for a transparent
tracking process to measure progress toward both short- and long-term
objectives as a means of building trust and confidence. Tracking of energy sector
metrics would provide much needed clarity on how quickly the energy sector
is transforming and would provide key information to underpin countries’
domestic energy policy efforts.
Significant climate action is already underway and, as seen in Chapter 1, there are some
encouraging early signs that emissions growth may be starting to decouple from global economic
growth. The cost of renewable energy continues to fall, many countries are implementing more
demanding energy efficiency measures, reform of fossil-fuel subsidies has started and various
forms of implementing action are being taken by cities around the world. Public demands for
clean air and clean water are a strong supporting motivation for change. Governments’ pledges
to the United Nations Framework Convention on Climate Change (UNFCCC) for the period
after 2020 have begun to arrive (Chapter 1), and China and India have both announced climate
and low-carbon energy strategies. The private sector is also engaging in mitigation actions: a
coalition of almost 1 450 companies has reported saving around 420 million tonnes (Mt) of
carbon-dioxide equivalent (CO2‑eq) in 2013, linked to $170 billion of low-carbon investment.
But much of the transformational change needed in the energy sector to meet the 2 °C climate
goal has yet to take place. To bring this forth requires scaled-up national, regional and local
action, guided by appropriate policies and standards, and mobilisation of both public and
private finance for low-carbon energy supply and infrastructure. An international framework is
needed to co-ordinate and generate confidence in these national efforts and then progressively
to amplify them until low-carbon energy investment becomes the global norm. Clear signals
of the need for transformational change are required from the highest political level, with all
major emitting countries on-board.
This chapter focuses on how the decisions to be taken at COP21 can best encompass and
address the challenges put forward in previous chapters. How can COP21 both recognise
existing efforts and help countries to do more? How can it best facilitate a long-term transition
to low-carbon energy systems, while also delivering short-term achievements? How can it
overcome the dual trials of deepening the decarbonisation of the energy system while also
building in greater resilience to the new challenges created by the degree of climate change
which is already inevitable?
Capacity
Fixed
building
carbon
budget 9
y
Pr rack
og
og in
ol
t
hn
re g
ss
c
10
Te
Divided
among Nationally
parties Markets determined Finance
actions 11
Increased ambition of
nationally determined action 12
13
13
There will inevitably be some overlap between these approaches. For example, although
the solutions sharing approach is founded on nationally determined contributions, the 13
2 °C goal implies a carbon budget at the global level that provides a reference for the
adequacy of collective efforts. Similarly, although countries are free to determine their 14
own contributions under a solutions sharing approach, considerations of equity will create
expectations about the type and ambition of various Parties’ actions: in particular, the
16
least-developed countries are concerned to ensure they are left with sufficient “carbon
space” within the 2 °C goal to allow for their sustainable development.
17
Submitting national climate contributions for COP21 will not be the end of the process,
but rather provide a basis from which to create a “virtuous circle” of growing ambition
18
(Figure 5.2). After setting mitigation goals, many countries will need assistance in mobilising
then
Strentigon
tiga goals Su
m i
ca pp
p
or city,
ul
a
t t fina
ssf
ech nce
e
Succ
nolo
Continuous
gy
cycle of
increasing
action
To send the necessary signals to the energy sector, the COP21 agreement should be built
on four pillars:
Peak Five-year 2
in emissions revision
4
Lock in Track the
the vision transition
5
6
These four pillars (Figure 5.3), which are explored in the following sections, need a set of
tools to deliver them. A strong agreement on finance at COP21 is critical, to re-orient energy 7
sector investment flows (public and private) towards delivering low-carbon, climate resilient
projects and portfolios. Carbon pricing will be needed as a feature of the national and
8
international policy response and should be supported by the COP21 agreement (Box 5.1).
9
Box 5.1 ⊳ Pricing energy correctly
The facilitative rather than prescriptive approach to be taken at COP21 may make it difficult
immediately to assess the outcome. Success will ultimately be judged by whether it sends a
clear message of worldwide commitment to decarbonisation and low-carbon development,
thus providing the signal that public and private investors need to embrace this new world.
For the door to 2 °C to remain open, global energy-related emissions must peak as soon
as possible. The analysis in Chapter 3 shows that the widespread integration into intended
national climate contributions of a handful of energy sector measures would result in total
global energy-related emissions ceasing to rise by 2020, without prejudice to regional
economic growth and development (Figure 5.4). The Bridge Scenario is not, in itself, a 2 °C
scenario, but the near-term peak in emissions that it delivers is a necessary step towards a
2 °C pathway. A near-term peak in global emissions is also critical for credibility of overall
climate efforts: if investors and policymakers see global emissions slow then peak, this in
itself will be a hugely significant signal that the transition is underway.
While achievement of an early peak in emissions implies success for decoupling at global
level between economic growth and growth in greenhouse-gas (GHG) emissions, it does
not imply that this decoupling occurs in all countries within the same timeframe. The
implementation of the five energy sector policies proposed in the Bridge Scenario locks in
the decoupling observed in OECD countries since 2011. It also enables the initial signs of
decoupling observed in China’s emissions in 2014 to hold through to 2025, enabling a near
doubling of the economy with an almost flat emissions trajectory. In other countries, though
there is a clear weakening in the link between development and emissions; emissions still
rise, but only at one-fifth of the growth in gross domestic product (GDP).
INDC Scenario 2
33
3
Bridge Scenario
30
4
27
5
450 Scenario
24 6
2015 2020 2025 2030
7
With this backdrop, countries that have yet to submit an INDC for 2025 could consider
putting forward a mitigation goal that is at least in line with the scale of ambition reflected 8
in the Bridge Scenario presented in Chapter 3. Countries that have already submitted INDCs
for 2025 could consider whether to: 9
Strengthen mitigation goals for the period to 2025, preferably at COP21, but at least
before 2020, so that they, at a minimum, reflect the level of ambition expressed in the 10
Bridge Scenario.
Seek to significantly over-achieve stated 2025 goals by implementing the energy 11
policies outlined in the Bridge Scenario.
The COP21 agreement must therefore set the conditions for a near-term peak in emissions,
12
by creating an opportunity for countries to revisit their 2025 mitigation goals before these are
finalised and encouraging consistency of goals and planned policy actions with longer term 13
nationally determined low-carbon development pathways in line with the global 2 °C goal.
Setting strong mitigation goals for 2025 will encourage an early start to national actions, 13
including the GDP-neutral actions of the Bridge Scenario. Strong support for pre-2020 action
could be provided by mobilising public and private finance, capacity building, technology 13
transfer and policy collaboration to assist countries to “step onto the Bridge” as soon as
possible. Although the actions in the Bridge Scenario are cost-effective, considerable effort 14
and expertise will be required to make them a reality.
Some countries or regions could choose to go beyond the Bridge Scenario. Investing in 16
deeper emission reduction actions in line with a more optimal path to a 2 °C scenario pays
off in the long term: the delays built in to the Bridge Scenario involve higher long-term 17
costs than an optimal 2 °C Scenario. Countries that are willing to act early not only lower
their transition costs, but play a significant role in demonstrating what is achievable and
18
catalysing greater action elsewhere.
An important aspect of this five-year review cycle will be the expectation, which should be
set out in the COP21 agreement, that these nationally determined short-term mitigation
goals should be consistent with longer term nationally determined low-carbon development
pathways (which themselves would be updated over time with changing circumstances).
Consistency between short- and longer-term intentions allows decarbonisation to fit within
the context of development and reduces the risk that weak goals will be set in the short
term to allow room for later strengthening, since the additional long-term economic cost
of such an approach will be apparent.
In addition to achieving a peak in global emissions, following the Bridge Scenario to 2025
keeps new build of electricity infrastructure on track. Thanks to efficiency measures and
a push towards renewables, the committed emissions from new power plants built to
2025 in the Bridge Scenario are fully compatible with a 2 °C target trajectory (Figure 5.5).
By contrast, new power plants built by 2020 in the INDC Scenario would result in
cumulative emissions through 2040 of 4.6 Gt CO2 above levels consistent with a 2 °C path,
Built 2021-2025
80
Built to 2020 but
not yet under
6
construction
60
7
40 2025:
extra 19.3 Gt
8
20
2020:
extra 4.6 Gt 9
INDC Scenario Bridge Scenario 450 Scenario
10
Note: “Committed emissions” are the cumulative emissions to 2040 from these plants, operating under the conditions
of the corresponding scenario.
11
With a five-year review cycle, mitigation goals for the 2025-2030 period would be set
before 2025 for those that do not have them, and existing 2030 targets reviewed, and 12
if appropriate, revised for those that do. If countries have brought their 2025 climate
contributions into line with the measures recommended in the Bridge Scenario, then global 13
energy-related GHG emissions will have already peaked by the time 2025-2030 goals are
being set, building momentum for greater action after 2025. 13
The level of mitigation ambition countries put forward for the 2025-2030 period will be a key
determinant of whether the global 2 °C goal remains within reach. The Intergovernmental 13
Panel on Climate Change’s Fifth Assessment Report found that very few scenarios with
annual GHG emissions above 2010 levels in 2030 still had at least a 50% chance of meeting 14
the 2 °C goal, and these all require net global CO2 emissions to become negative before
2100.1 In 2 °C scenarios that do not rely on net negative CO2 emissions, GHG emissions
must fall substantially below 2010 levels by 2030 (IPCC, 2014).
16
17
1. “Negative emissions” refers to net storage of CO2 through measures such as afforestation, combining biomass power
generation with CCS to store the resulting CO2, or direct air capture and storage of CO2. Achieving net negative emissions 18
would entail total annual storage higher than total annual emissions.
The international aviation and maritime sectors are major consumers of oil; together
they consumed around 7.0 million barrels per day of oil in 2013, 8% of global oil
demand. These sectors’ contribution to global emissions is on the rise as well; while
they accounted for only 4% of global CO2 emissions growth between 1990 and 2013,
they are expected to be among the fastest growing sectors over the next decades.
This does not mean that progress has been absent. Continuous improvements have
been achieved in the efficiency of new aircraft, containing emissions growth. In the
maritime sector, “slow steaming”2 has helped to reduce emissions growth in recent
years (partially driven by high oil prices). Both the shipping and aviation industries have
also been actively seeking to implement other forms of mitigation. The International
Maritime Organization (IMO) has made the Energy Efficiency Design Index (EEDI)
mandatory for new ships and the Ship Energy Efficiency Management Plan is similarly
mandatory for all ships; the EEDI standards will be implemented in progressive phases,
evolving towards a 30% improvement (compared with the average efficiency of ships
built between 2000 and 2010) by 2025. The International Civil Aviation Organization
(ICAO) has put in place a voluntary 2% annual efficiency improvement target to
2050 and an aim for “carbon neutral growth” from 2020 (ICAO, 2010). Pursuant to a
resolution by the ICAO Assembly in 2013, the organisation is developing a package of
measures to achieve carbon neutral growth goal, including a CO2 emissions standard
for aircraft engines and a global market-based measure (MBM) for CO2 emissions from
international aviation, for consideration at its next assembly in October 2016.
However, efforts to build a broader global framework so far have not materialised.
There are a number of policy options that could help curtail further emissions growth.
They include regulatory instruments, such as fuel efficiency and emission standards at
an aircraft/vessel or system level or regulations targeting the GHG intensity of fuels, that
could foster the deployment of low-carbon fuels; and market-based approaches such
as the global MBM being developed by ICAO (and more generally including emissions
trading under caps, or fuel or emission taxes – international aviation and shipping are
exempted from fossil-fuel taxation). But all these instruments require agreement at
an international level, a long and difficult process. Although not explicitly part of the
agenda of the UNFCCC negotiations, the upcoming COP21 meeting is an opportunity
to take stock of progress in these key sectors in an attempt to boost collective efforts
at the IMO and ICAO.
Energy-related CO2 emissions in the Bridge Scenario are still above 2010 levels in 2030,
so to follow a pathway realistically consistent with 2 °C, countries must step-up ambition
from 2025. To move from the Bridge Scenario in 2025 onto a 2 °C pathway would require
2. This refers to ships operating at lower speeds to reduce fuel consumption thereby reducing costs and
carbon emissions.
A first step to lock-in the 2 °C vision more strongly in the COP21 agreement would be
16
to re-express that goal in terms of a long-term GHG emissions target. This would be
more straightforward to apply in the energy sector and lend itself to easier accounting 17
3. The nuclear power programmes resulted in a reduction in France’s energy-related CO2/GDP ratio averaging 5.4% per 18
year between 1978 and 1988, and in Sweden averaging 6.2% between 1979 and 1989.
16
Gt
12
8
INDC Scenario
Bridge Scenario
450 Scenario
As well as assisting in sending a clear signal to investors in new long-lived assets, the newly
expressed long-term goal and low-carbon development pathways will shape decisions on
the operation or retirement of existing capital stock and technology development. Goals and
actions reflected in the INDC Scenario result in operating existing power plants and those
under construction in such a way that they emit some 275 Gt from 2015 to 2040 (Figure 5.6).
4. The particular form of the goal would need to take into account the uncertainty in translating temperature rise
probabilities into specific emissions targets and the need for flexibility to incorporate updated scientific knowledge.
A long-term global emissions goal can also boost further energy technology development. 3
The benefits of earlier investment in solar and wind generation are now being seen in
rapidly falling prices. As explored in more detail in Chapter 4, the same process will need 4
to be followed to bring forward carbon capture and storage, battery storage, electric
and other low-emissions vehicles and other emerging technologies (Figure 5.7). A clear, 5
measurable long-term vision in the COP21 agreement will underpin investment in those
key technologies that are essential to unlock long-term emission reductions compatible
with a 2 °C trajectory.
6
7
Figure 5.7 ⊳ Global investment in variable renewables, CCS and electric
vehicles in the 450 Scenario
8
800 CCS
Billion dollars (2013)
200 12
100
13
2015 2020 2025 2030 2035 2040
13
There are also a number of more detailed ways the COP21 decisions (and subsequent
technical work programmes) can address aspects of technology development (IEA, 2015a):
13
reporting on technology progress ahead of each five-year review; global goals for RDD&D
levels; country reporting on low-carbon technology actions; and strengthening the link
between the technology and finance aspects of the UNFCCC. The technology needs 14
assessments and technology action plans prepared by developing countries should be
integrated into wider low-carbon development strategies, improving alignment between 16
these countries’ development, mitigation and technology goals (Box 5.3). Parties should also
be encouraged to increase international co-operation to scale-up low-carbon technologies. 17
There are many existing multilateral technology and policy collaborations on topics such as
carbon pricing, renewable energy and energy efficiency. Care should be taken to build on,
18
consolidate and not duplicate these efforts.
Energy supply, transmission and demand can all directly be affected by changes to
the climate, including higher temperatures, more frequent and extreme weather
events, changes in water availability, sea level rise and permafrost melting. The long
life of many energy sector assets, which rightly are classified as essential national
infrastructure, underlines the need for governments and industry to develop and
implement effective strategies to improve climate resilience (IEA, 2013). Climate-
induced changes in the availability of water are a major concern for energy supply
and power generation. This is because reduced water availability will constrain
energy production from fossil fuels, nuclear power, biofuels, hydropower and some
solar power systems. Both thermal and nuclear power plants require water for
cooling; apart from reduced water availability, a rise in water temperature reduces
the overall plant efficiency.5
The risks posed to the energy sector from climate change and the need to adapt is
increasingly recognised, but there is still a long way to go in terms of improving climate
resilience. Some countries have launched climate change risk assessments, as well as
national adaptation strategies and programmes that include specific energy sector
analysis. In recent years, the European Union, United States, Canada and China have
all launched adaptation strategies.
The UNFCCC National Adaptation Programmes of Action and National Adaptation
Plans (NAPs) processes can help least-developed countries to communicate their most
urgent adaptation needs. Further actions that could be taken in countries’ INDCs and
through the COP21 decisions include:
Exploring energy sector mitigation actions that also enhance resilience (e.g.
energy efficiency, decentralised renewable generation).
Integrating or interlinking low-carbon development strategies to underpin
mitigation with NAPs to support resilient, low-carbon growth.
Encouraging countries to include the energy sector in their NAPs.
While developing countries, especially the least developed, are often the most
vulnerable to the impacts of climate change, all countries around the world will be
affected and need to adapt. An important task is to protect energy infrastructure
and ensure energy security. Governments should support the private sector through
policy and regulatory oversight, technology development and providing information
about expected future climate developments.
5. The link between water and energy will be analysed in a chapter of the World Energy Outlook-2015 to be
published 10 November 2015.
The UNFCCC process already includes biennial reporting of GHG emission inventories and 7
mitigation actions for both developed and developing countries,6 as well as more detailed
national communications every four years, providing a solid basis to work from. Details of
the post-2020 reporting and accounting frameworks may not be agreed at COP21: these
8
can be the subject of subsequent technical work programmes. The COP21 agreement,
however, must set the high-level principles, including the need for agreed rules for the 9
measurement and reporting of emissions (such as use of latest IPCC guidelines), and the
provision for developing accounting rules for the wide range of goal types countries are 10
likely to put forward. The COP21 agreement should provide for progress toward long-term
objectives (the global goal and nationally determined low-carbon development pathways) 11
to be reported and tracked, in addition to measuring progress towards each five-year goal.
Tracking progress toward long-term objectives will require a wider focus on the drivers of
change, such as energy sector investment patterns, not just GHG levels.
12
Some countries may express their nationally determined contributions to the COP21
13
agreement in terms of particular energy sector objectives, such as the share of total
energy supply to come from renewables, the rate of decline in fossil-fuel subsidy levels,
or the scale of energy intensity improvement, possibly within an overall GHG reduction 13
target. The UNFCCC will need to develop processes to account for the achievement of
such energy sector goals, as well as setting details of how to account for more traditional 13
GHG targets. Even where countries frame their nationally determined contribution only
as a GHG emissions goal, reporting and tracking other key energy sector details could 14
provide useful supplemental information regarding contributing developments, while also
contributing to co-operation between nations on areas of common interest, such as the
16
effective promotion of energy efficiency or the phase-out of fossil-fuel subsidies.
17
6. The details are currently different for developed and developing countries, with developed country reports containing
more detailed information such as projections of future emissions, and being subject to more stringent review processes. 18
Developed countries also report GHG inventories annually.
Fossil-fuel • Share of natural gas vented or lost out of total gas produced %
systems • GHG emissions from fugitive emissions, gas venting, flaring and t CO2-eq/toe
losses per unit of energy extracted
* Includes renewables, nuclear and plants incorporating carbon capture and storage (CCS). For CCS, the relevant
measurement includes only the portion which is captured. ** Sub-sectoral metrics for steel and cement are shown here
as examples; other sub-sectors should also be tracked.
Notes: toe = tonnes of oil equivalent, g CO2/kWh = grammes of CO2 per kilowatt-hour, g CO2/v-km =grammes of CO2 per
vehicle-kilometre, g CO2/t km= grammes of CO2 per tonne-kilometre.
Frameworks, both national and international, need to look beyond activities with a short- 4
term effect and include tracking of those which may have little impact on GHG emissions
in the near term. Examples include more compact urban development, public transport 5
promotion, strengthening building codes to improve efficiency and requiring the use of
best-available industrial technology in new investments.
6
Figure 5.8 ⊳ CO2 emissions intensity of electricity generation by selected
7
region in the Bridge Scenario
800
8
g CO2/kWh
2013
2025
-32% -35% 9
600
- 47%
10
400 -34%
-42% 11
200
12
United States European Japan China India
Union 13
13
Widening the range of data tracked can usefully illustrate the commonality of the challenge
faced by both developing and developed countries to decarbonise their energy systems. For
example, Figure 5.8 shows how the emissions intensity of electricity generation changes
13
in key regions in the Bridge Scenario. Although the starting points vary substantially,
assessing the percentage change compared to 2013 levels makes the common endeavour 14
more obvious: all five regions reduce the GHG emissions intensity of power generation
substantially by 2025. 16
7. Specific guidance on energy efficiency metrics can be found in Energy Efficiency Indicators: Fundamentals on Statistics
17
(IEA, 2014b) and Energy Efficiency Indicators: Essentials for Policymaking (IEA, 2014c). The Tracking Clean Energy
Progress Report (IEA, 2015b) could be extended to cover a wider range of sectoral measurements, including individual 18
country data, needed within the UNFCCC reporting framework to track energy sector developments.
All INDCs that had been formally submitted to the UNFCCC Secretariat by 14 May 2015 have
been included in Table A.1 in the order in which they have been submitted. Liechtenstein
and Andorra have not been included in Table A.1, but the high-level target is included in
Chapter 1, Table 1.1. Table A.2 sets out the details about policies for countries that have
made statements indicating the likely content of an INDC that has yet to be delivered (or
otherwise announcing plans to reduce emissions). These declarations have been taken as the
basis for policies assumptions. For countries that have not yet submitted an INDC and have
not publicly stated its likely content, or specified policies for the entire energy sector, the
INDC Scenario includes the policies defined in the New Policies Scenario of the World Energy
Outlook 2014.
UNFCCC Party Copenhagen pledge (GHG) INDC Recent developments/targets and possible strategies for the energy sector
Switzerland 20%/30% below 1990 levels Reduce GHG emissions by 50% below 1990 levels by 2012 Ordinance for the Reduction of CO2 Emissions:
by 2020. 2030 (35% below by 2025). • Limit emissions relative to 1990 levels: from buildings to no more than
78%; from industry to no more than 93%; and from transport not to
exceed 100%.
European 20%/30% below 1990 levels Reduce EU domestic GHG emissions at least 40% 2014 Climate and Energy Policy Framework for 2030:
Union by 2020. below 1990 levels by 2030. • Achieve at least 27% of renewables and energy efficiency targets for 2030.
Norway 30%/40% below 1990 levels Reduce GHG emissions by at least 40% compared to 2015 White Paper priority areas:
by 2020. 1990 levels by 2030. • Reduce emissions from transport and industry.
• CCS; renewables and low-carbon shipping.
Mexico Up to 30% below with Reduce GHG and short-lived climate pollutant 2013 National Climate Change Strategy:
respect to business-as- emissions unconditionally by 25% by 2030 with • At least 40% of power generation from clean sources within 20 years;
usual by 2020. respect to business-as-usual. incentive systems to promote energy efficiency and reduce methane
emissions from oil and gas production.
World Energy Outlook | Special Report
United States Relative to 2005 levels: 17% Reduce net GHG emissions 26-28% below 2005 levels 2013 Climate Action Plan:
below by 2020, 42% below by 2025. • Carbon pollution standards for new and existing power plants.
by 2030 and 83% below
• Post-2018 heavy-duty vehicle fuel efficiency standards.
by 2050.
• Achieve a 40-45% reduction in methane emissions from 2012 levels by
2025 from oil and gas production.
Gabon Several actions to reduce Reduce CO2, CH4, N2O emissions by at least 50% with 2012 Climate Plan:
emissions from forestry and respect to a reference scenario by 2025. • Reduction of CH4 flaring via reinjection and use in power generation.
the energy sectors.
• 80% of power generation from hydropower by 2020.
Russia 15-25% below 1990 levels Reduce anthropogenic GHG emissions by 25-30% 2010 Energy Strategy to 2030:
by 2020 (25% affirmed by below 1990 levels by 2030 subject to the maximum • Reduce energy intensity 56% below 2005 level by 2030.
presidential decree). possible account of absorptive capacity of forests.
• Increase the share of non-fossil fuels in primary energy demand to 13-14%
by 2030.
Table A.2 ⊳ Assumptions for selected countries
Annex A | Policies and measures
UNFCCC Party Copenhagen pledge (GHG) Assumptions in the INDC Scenario Recent developments/targets and possible strategies
Japan 25% below 1990 levels by Target to increase renewables to over 20% of power April 2014: New Strategic Energy Plan.
2020. generation by 2030. Gradual restart of electricity March 2015: Cabinet decision on the proposed Act for the Improvement of
generation from nuclear power plants. the Energy Saving Performance of Buildings.
Korea 30% below business-as- 30% reduction in GHG emissions by 2020 with respect 2013 2nd National Basic Energy Plan.
usual emissions by 2020. to business-as-usual. 1st stage of emissions trading (2015-2017).
Renewable portfolio standards.
China Emission intensity 40-45% Peak CO2 emissions by around 2030. Increase 2011 12th Five-Year Plan:
below 2005 levels by 2020. non-fossil fuel share in primary energy to 20% by • 16% reduction in energy intensity from 2005 by 2015.
2030.
2014 Energy Development Strategic Action Plan and National Climate Change
Plan (2014-2020):
• Maximum 4.8 billion tonnes of coal equivalent per year (primary energy
consumption).
• Limit the share of coal to less than 62% of total primary energy demand
in 2020.
• 20% non-fossil fuel share of primary energy consumption by 2030.
• 100 GW of PV and 200 GW of wind capacity.
India Emission intensity 20-25% Target to increase renewables to 175 GW by 2022, of 2008 National Action Plan on Climate Change.
below 2005 levels by 2020. which, 100 GW of solar. 2013 12th Five-Year Plan (2012–2017).
Target of 175 GW of renewables by 2022.
Brazil 36-39% below projected 36% reduction in GHG emissions by 2020 with respect Ten-Year Plan for Energy Expansion.
emissions by 2020. to business-as-usual. National Energy Efficiency Plan.
151
A
Annex B
B
Annex B | Data tables for the Bridge Scenario 155
OECD: Bridge Scenario
OECD: Bridge Scenario
B
Annex B | Data tables for the Bridge Scenario 157
OECD Americas: Bridge Scenario
OECD Americas: Bridge Scenario
B
Annex B | Data tables for the Bridge Scenario 159
United States: Bridge Scenario
United States: Bridge Scenario
B
Annex B | Data tables for the Bridge Scenario 161
OECD Europe: Bridge Scenario
OECD Europe: Bridge Scenario
B
Annex B | Data tables for the Bridge Scenario 163
European Union: Bridge Scenario
European Union: Bridge Scenario
B
Annex B | Data tables for the Bridge Scenario 165
OECD Asia Oceania: Bridge Scenario
OECD Asia Oceania: Bridge Scenario
B
Annex B | Data tables for the Bridge Scenario 167
Non-OECD: Bridge Scenario
Non-OECD: Bridge Scenario
B
Annex B | Data tables for the Bridge Scenario 169
E. Europe/Eurasia: Bridge Scenario
E. Europe/Eurasia: Bridge Scenario
B
Annex B | Data tables for the Bridge Scenario 171
Russia: Bridge Scenario
Russia: Bridge Scenario
B
Annex B | Data tables for the Bridge Scenario 173
Non-OECD Asia: Bridge Scenario
Non-OECD Asia: Bridge Scenario
B
Annex B | Data tables for the Bridge Scenario 175
China: Bridge Scenario
China: Bridge Scenario
B
Annex B | Data tables for the Bridge Scenario 177
India: Bridge Scenario
India: Bridge Scenario
B
Annex B | Data tables for the Bridge Scenario 179
Middle East: Bridge Scenario
Middle East: Bridge Scenario
B
Annex B | Data tables for the Bridge Scenario 181
Africa: Bridge Scenario
Africa: Bridge Scenario
B
Annex B | Data tables for the Bridge Scenario 183
Latin America: Bridge Scenario
Latin America: Bridge Scenario
B
Annex B | Data tables for the Bridge Scenario 185
Annex C
Definitions
This annex provides general information on units and conversion factors for energy units
and currencies; abbreviations and acronyms; and regional and country groupings.
Units
Coal Mtce million tonnes of coal equivalent (equals 0.7 Mtoe)
Currency conversions
Exchange rates (2013 annual average) 1 US Dollar equals:
British Pound 0.64
Chinese Yuan 6.20
Euro 0.75
Indian Rupee 60.52
Japanese Yen 97.60
Russian Ruble 31.76
C
Annex C | Definitions 189
Regional and country groupings
Africa: Includes North Africa and sub-Saharan Africa.
Developing countries: Non-OECD Asia, Middle East, Africa and Latin America regional
groupings.
European Union: Austria, Belgium, Bulgaria, Croatia, Cyprus1,2, Czech Republic, Denmark,
Estonia, Finland, France, Germany, Greece, Hungary, Ireland, Italy, Latvia, Lithuania,
Luxembourg, Malta, Netherlands, Poland, Portugal, Romania, Slovak Republic, Slovenia,
Spain, Sweden and United Kingdom.
G20: Argentina, Australia, Brazil, Canada, China, France, Germany, India, Indonesia, Italy,
Japan, Mexico, Russian Federation, Saudi Arabia, South Africa, Korea, Turkey, United
Kingdom, United States and European Union.
Latin America: Argentina, Bolivia, Brazil, Colombia, Costa Rica, Cuba, Dominican Republic,
Ecuador, El Salvador, Guatemala, Haiti, Honduras, Jamaica, Netherlands Antilles, Nicaragua,
Panama, Paraguay, Peru, Trinidad and Tobago, Uruguay, Venezuela and other non-OECD
America countries and territories.3
Middle East: Bahrain, the Islamic Republic of Iran, Iraq, Jordan, Kuwait, Lebanon, Oman,
Qatar, Saudi Arabia, Syrian Arab Republic, United Arab Emirates and Yemen.
1. Note by Turkey: The information in this document with reference to “Cyprus” relates to the southern part of the
Island. There is no single authority representing both Turkish and Greek Cypriot people on the Island. Turkey recognises
the Turkish Republic of Northern Cyprus (TRNC). Until a lasting and equitable solution is found within the context of
United Nations, Turkey shall preserve its position concerning the “Cyprus issue”.
2. Note by all the European Union Member States of the OECD and the European Union: The Republic of Cyprus is
recognised by all members of the United Nations with the exception of Turkey. The information in this document relates
to the area under the effective control of the Government of the Republic of Cyprus.
3. Individual data are not available and are estimated in aggregate for: Antigua and Barbuda, Aruba, Bahamas, Barbados,
Belize, Bermuda, British Virgin Islands, Cayman Islands, Dominica, Falkland Islands (Malvinas), French Guyana, Grenada,
Guadeloupe, Guyana, Martinique, Montserrat, St. Kitts and Nevis, St Lucia, St Pierre et Miquelon, St. Vincent and the
Grenadines, Suriname and Turks and Caicos Islands.
North Africa: Algeria, Egypt, Libya, Morocco, Tunisia and Western Sahara (under UN
mandate).
OECD: Includes OECD Americas, OECD Asia Oceania and OECD Europe regional groupings.
OECD Europe: Austria, Belgium, Czech Republic, Denmark, Estonia, Finland, France,
Germany, Greece, Hungary, Iceland, Ireland, Italy, Luxembourg, Netherlands, Norway,
Poland, Portugal, Slovak Republic, Slovenia, Spain, Sweden, Switzerland, Turkey and United
Kingdom. For statistical reasons, this region also includes Israel.5
Southeast Asia: Brunei Darussalam, Cambodia, Indonesia, Lao PDR, Malaysia, Myanmar,
Philippines, Singapore, Thailand and Vietnam. These countries are all members of the
Association of Southeast Asian Nations (ASEAN).
Sub-Saharan Africa: Angola, Benin, Botswana, Burkina Faso, Burundi, Cabo Verde Cameroon,
Comoros, Central African Republic (CAR), Chad, Congo, Côte d’Ivoire, Democratic Republic
of Congo (DR Congo), Djibouti, Equatorial Guinea, Eritrea, Ethiopia, Gabon, Gambia, Ghana,
Guinea, Guinea-Bissau, Kenya, Lesotho, Liberia, Madagascar, Malawi, Mali, Mauritania,
Mauritius, Mozambique, Namibia, Niger, Nigeria, Rwanda, Sao Tome and Principe, Senegal,
Seychelles, Sierra Leone, South Africa, Somalia, South Sudan, Sudan, Swaziland, Togo,
Uganda, United Republic of Tanzania, Zambia and Zimbabwe.
4. Individual data are not available and are estimated in aggregate for: Afghanistan, Bhutan, Cook Islands, East Timor,
Fiji, French Polynesia, Kiribati, Lao PDR, Macao (China), Maldives, New Caledonia, Palau, Papua New Guinea, Samoa,
Solomon Islands, Tonga and Vanuatu.
5. The statistical data for Israel are supplied by and under the responsibility of the relevant Israeli authorities. The use of
such data by the OECD and/or the IEA is without prejudice to the status of the Golan Heights, East Jerusalem and Israeli
settlements in the West Bank under the terms of international law.
C
Annex C | Definitions 191
Annex D
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